Graham Stephan thinks recent cryptocurrency crash is “different”

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Most cryptocurrency investors are aware of the recent stock market crash. The decline has been dramatic, with the total value of the cryptocurrency market falling to just under $ 1 trillion from nearly $ 3 trillion at its peak.

The market has been volatile in the past, but some investors believe it will be different this time around.

One such investor is Graham Stephan, a YouTube character and real estate agent who often talks about preserving and building wealth. Stephan recently took to Twitter to share his thoughts on the incident and his predictions for the future of the cryptocurrency industry.

Here’s what Graham Stephan has to say about the recent cryptocurrency crash

Stephan started his Twitter post by explaining that he is a longtime fan of cryptocurrencies and has had personal interests in virtual currencies since 2017. The lows are in the market, he is convinced that this serious collapse is something else entirely and is just the tip. of the iceberg.

Stephan warned that “irresponsible management and leverage caused the cryptocurrency crisis,” which he says will not subside anytime soon, for two main reasons.

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The first problem Stephan identified was that the cryptocurrency platforms were largely unregulated and took advantage of this lack of supervision to borrow funds from clients, which they then used as collateral for further loans. .

As a result, some platforms were so overwhelmed that when customers started selling Panina during the crisis, they had to stop payments. Stephan blamed this phenomenon for the failure of Celsius, Voyager and 3AC.

Another problem Stephan pointed out is “unforced error,” including Celcius covering hacks and unfairly returning several million dollars to Eton, and Voyager making large loans to 3AC without adequate collateral.

Stephan’s warning is important and investors should listen to him. It touches on some of the same issues raised by billionaire Mark Cuban, who commented on the recent cryptocurrency crash, stating that companies without a strong business model risk closing down permanently during a crisis, he says. [Warren] Buffett, when the tide goes out, you can see who is swimming naked.

What do you think you need to do to protect your money?

Given the underlying issues with crypto platforms that Stephan points out, investors still interested in this asset class may be wondering what they can do to protect their wealth when buying virtual currencies.

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Stephan also made some suggestions on this. Specifically, he made four suggestions, including: beware of user-level fraud; Move your long-term cryptocurrency holdings to cold storage; Use different platforms to invest in cryptocurrencies. Make sure you don’t deposit more money than you can afford to lose if things go wrong.

This is good advice, especially the warning not to invest the money you rely on. Even financial experts like Suze Orman have warned against investing in cryptocurrencies with money you can’t afford to lose.

Whether or not Stephan is right about the fundamental issues that will cause permanent problems in the cryptocurrency industry, it is important to note that the lack of regulatory oversight and high volatility of this untested asset class makes cryptocurrencies more dangerous. how many others. This doesn’t mean you have to leave the industry, but you need to be careful and make sure you invest in traditional assets that have consolidated over time.

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