The FTX collapse has taken much of the cryptocurrency market with it, with a range of different companies and HNWIs being exposed to the onslaught in the markets.
Binance may be acquiring FTX
Binance has announced that they are to be acquiring FTX, although they reserve the rights not to enter into this after having completed their due diligence.
CZ explained in a series of tweets that FTX reached out asking for help from Binance, and Binance was happy to help them.
Binance was especially happy to help them given that the risk of contagion from FTX (as one of the largest market makers in crypto) could have been extremely problematic.
It still could be extremely problematic if Binance chooses not to go through with the acquisition, as they are under no obligation to continue with the acquisition if they don’t want to – it may be more prudent for Binance from a business perspective to simply allow their competition to die.
Over the long term, crypto always recovers
Massive collapses aren’t new to the world of cryptocurrencies, and they have always recovered in the past over a long enough time frame.
When one looks at the longer term price charts in a linear way it can seem far more unpredictable than it truly is, but Bitcoin’s growth on a logarithmic trend remains clear.
When on factors in the stage that we are in in the current cycle as related to the Bitcoin halvenings, the current market volatility ought not be so surprising – one could reasonably expect that the upcoming halvening in 2024 will precipitate further bullish momentum going forward.
High profile collapses improve the state of the industry
Although it may be slightly Darwinian, large collapses such as this improve the industry by forcing it to change.
Companies in the future ought to be held to a higher standard thanks to the failures of the companies of today, and retail will come to better understand the potential risks, and hopefully come to take more self custody of their assets.
All crypto exchanges should do merkle-tree proof-of-reserves.
Banks run on fractional reserves.
Crypto exchanges should not.@Binance will start to do proof-of-reserves soon. Full transparency.
— CZ Binance (@cz_binance) November 8, 2022
The other alternative, if the industry doesn’t mature, is that regulators will come to clamp down on the industry. This means that innovation may be stifled somewhat, which would be a step in the wrong direction.
Industry leaders such as CZ have the opportunity to set an example for the rest of the industry, and by posting proof of reserves will be able to improve the state of trust in the industry going forward. Some exchanges, such as Kraken, have already begun to post their proof of reserves.
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