From the weather outside, it seems another winter is upon us. In the crypto markets, that certainly seems to be the case.
The spectacular blowup of FTX has shaken things up a bunch. It turns out that the whole thing was smoke and mirrors. I kicked the tires hard on some crypto investments over the past few years, but really couldn’t get past the fact that so many things about it just didn’t make sense. Why were crypto savings accounts yielding 8% while regular savings accounts were at .5%?
It became clear when FTX blew up. These sorts of accounts were actually doing highly leveraged crypto bets with your deposits. That’s all good and well until a bank run happens and there is a liquidity crisis. Although, it seems that FTX was really insolvent rather than illiquid. I guess I’ll just have fun being poor…