The crypto crash was widely expected to happen as it was the case many times before ever since Bitcoin was created. That didn’t stop many investors from being hurt as Bitcoin and the whole cryptocurrency market plunged throughout the year.
What retail and even some institutional participants didn’t realize was that they were relying on flawed projects or badly managed operations that eventually brought clients down with them.
Due diligence is now the name of the game as the digital asset space learns from its past mistakes to come out of the ‘crypto winter’ stronger than it was before.
Finance Feeds spoke with Jesse Brown, CEO of Himalaya Exchange, to learn about his views on the matter as the firm stands to gain from the reconfiguration of the industry.
Jesse Brown has extensive experience driving innovative crypto infrastructure solutions, developing founding teams, establishing strategic partnerships, and building compelling products. Prior to Himalaya Exchange, he was Blockchain Architect at DTCC and CTO at DataBlockChain.
How can investors get through the crypto-winter?
Investing, whether in crypto or traditional stocks and shares, always carries a level of risk and involves a level of uncertainty. Prices go up and they go down. For many, that’s all part of the appeal and is par for the course in investing.
As we all saw with the price of Luna, coins can nosedive in the blink of an eye. So, if you are financially overcommitted or haven’t spread your risk, then the market can inflict heavy losses. People should only start investing when they have a nest egg of three to six months’ worth of expenses set aside. This ensures you have the funds you need to invest in the first place, and a ‘plan B’ in case anything goes wrong with your investments.
Will Celsius Network’s withdrawal freezes cause lost faith in investing? And how regulators/officials can step in?
It’s important that the crypto industry learns its lesson from the recent crash– I’m sure the 1.7 million Celsius customers who lost money have first-hand experience. The issue is that Celsius was never really decentralised. They froze their assets and they had a structured team of lawyers in place; these aren’t the actions of a decentralised player in the crypto space.
Celsius were masquerading as a DeFi institution but bore more similarities to a commercial organisation. When this is the case, we need to start treating crypto banks in the same way as traditional banks, which means mandated capital requirements, proper stress testing and systemic risk evaluations
Why did many stablecoins crash? Such as Terra USD that broke its peg to the dollar and is now trading at 0
The underlying issue with Terra USD is that the stablecoin was supported by an algorithm, instead of cash. TerraUSD is the perfect example of where losses can be felt in a volatile market, especially if you’ve implemented bad policies and procedures. You can’t be tapping into your reserves 24, 48 hours later in this type of environment. You need your reserves very liquid, very quickly. That’s what we do well with Himalaya Dollar. We’re one hundred percent backed by cash reserves so in a difficult market, we’re not looking for outside governance or third parties to get our liquidity. We have it right on hand, so that was really the problem with UST.
Crypto assets remain riddled with deep uncertainty and volatility. Is the average FX/CFD broker prepared for crypto from a risk management perspective? What lessons can be learned?
Transparency lies at the heart of the crypto conundrum, and this is the industry’s clearest pathway to mainstream acceptance. Some exchanges have gone too far when promoting coins and we need to get away from that mentality.
If your outlook is to invest in a coin’s floor price and pray it multiplies by thousands, you are taking a very short-sighted approach. Just because a coin appears to be good value, does not necessarily mean it will take off in price – avoid catching any falling knives. Always question schemes posted online promising fast, easy cash generated by crypto before committing yourself.