The crypto community managed to ignore every lesson from 2008 on cascading networks of financial instability. This is a market microstructure built on sand. We are still in the early innings of what the ultimate forced unwind will look like. The core of the 2008 crisis was at least based on housing which has some inherent downside value and could be resolved via the Fed as a liquidity provider of last resort. Crypto libertarians have been angry at the Fed ever since. Well let’s see how fun a liquidity crisis goes as a counterfactual in an environment with no Fed support.
According to many posts here I’m not supposed to ever interact with a centralized entity but I should manage my own wallet and keep my keys printed on paper buried in the backyard. Yeah that sounds like a path to mass use case adoption of cryptocurrency.
The only ones who are going to walk away from this intact are the lawyers who will be litigating the wreckage here for decades. So much of this industry happens in the grey area of the law which was fine when everyone was getting rich. Now you will have an angry bunch of populist bag holder voters looking — fairly or not - to blame someone else for losing the kids’ college fund in some dodgy levered alt coin scheme.