Alexandre Counis

Cryptos: the new purge

Posted November 13, 2022, 1:55 pm

With the bankruptcy of FTX, one of the main cryptocurrency exchange platforms, the whole crypto planet is shaking. And beyond that, everyone in finance who is wondering what the bursting of a new bubble looks like.

The Spacs, these empty shells intended to buy companies to open the doors of the Stock Exchange for them, aroused the enthusiasm a few months ago, before it deflated in the face of the reluctance of the markets and the rise of interest rates. ‘interest. Tech saw the valuations of Gafam and certain fintechs reach unprecedented heights, before investors realized that their overly optimistic calculations were overvaluing “unprofitable tech” players. Now, it is the crypto exchanges that are at the center of all the disappointments. They developed too fast, surfed on the euphoria of investors and lived on resources before we realize today that they committed negligence and were badly managed. In short, the FTX platform is not worth 32 billion dollars, as we were led to believe.

This bubble is probably not the last to burst. Concerns are great about corporate debt, for example, and especially that of the riskiest borrowers. Many companies that went heavily into debt taking advantage of low rates are likely to suffer from their rise. The same goes for the debts of the States, especially the least well rated.

Great house cleaning

At this stage, no one “big”. Market corrections have so far remained localized. But that doesn’t mean there aren’t lessons to be learned. If they want to settle permanently in the landscape, cryptocurrencies now know that they will not be able to save a lot of cleaning. And a regulatory framework that could help them.

In truth, the FTX thing is more about a centralized Web 3.0 platform, than strictly speaking decentralized financial blockchains and cryptos. But it strikingly shows that none of what is imposed on players in traditional finance is asked by the new champions of the cryptosphere. No capital or balance sheet control systems, unlike banks, to ensure its soundness. No guarantee mechanism to protect the savings of users in case of bankruptcy, starting with individuals. A real call to regulate so that the actors are forced to provide safety cushions. And so that savers’ money is protected as it should be.

How to react effectively to changes?

Economic uncertainties, political tensions, global warming, changing businesses and industries… The world is changing. How to decipher weak signals, anticipate and best adapt? The “Echos” newsroom, with its 200 specialist journalists, provides you with strategic thinking tools every day to understand our environment and deal with changes. Through our analysis, surveys, chronicles and editorials, we support our subscribers in helping them make the best decisions.

I discover the proposals

Leave a Comment

Your email address will not be published. Required fields are marked *