If you haven’t been living under a rock, then you’ve been told that FTX is currently in big trouble and that there’s no chance they’ll survive those problems. In the traditional financial world, we speak of ‘contagion’ when the toppling of a large body causes entire markets and even economies to become unbalanced.
Is there contagion?
If we talk about bitcoin itself, then we can safely say that there is no question of contagion or danger of infection. Although it is a shame that it turns out that a large exchange party like FTX cannot be trusted, bitcoin itself remains unaffected by this.
Of course, we feel it in the course, especially due to the panic that arises from this, but in the long run this can only be good for bitcoin. What it turned out is that FTX had “sold” about 70,000 bitcoin to customers who were no longer present at the exchange platform at all.
That way, FTX basically pressed bitcoin that doesn’t actually exist at all. In that regard, staying afloat of fraudulent parties like FTX is precisely something that damages the scarcity of bitcoin and the scarcity is ultimately the part of bitcoin that causes the price to go up.
Centralised players are in trouble
Unlike bitcoin, there are a number of centralized players within the market who are in acute money problems due to the overturning of FTX. It started with BlockFi, which soon had to suspend the recordings and now Gemini Earn also seems to be on the edge of the abyss.
Gemini Earn is part of the Gemini trading platform of the Winklevoss brothers. That company, if you zoom out further, is again in the hands of the Digital Currency Group, which is also behind the Grayscale Bitcoin Trust. This way you can see how a bankruptcy at the bottom can ultimately be felt all the way to the top.
It is to be hoped for the industry that the damage will be limited, because for confidence in bitcoin, of course, this is not good. After all, most people do not know that bitcoin and parties like BlockFi and Gemini have nothing to do with each other in principle, they see it as a single whole.
In this regard, we must therefore keep our fingers crossed that not too many centralised players fall over. On the other hand, it would be good if companies that sell paper bitcoin and gamble with customer funds were filtered out as much as possible.
