Crypto Experiencing Massive Losses

While most experts will agree it has been a rough time for Bitcoin investors over the last year or so, things aren’t looking to improve any time soon. Over the last week, most cryptocurrencies experienced massive losses, with Bitcoin (BTC) dropping under $23,000. Now more than ever, it’s important to know how to invest in cryptocurrency and protect your investments from the ongoing crypto crash, and yes, crypto insiders are as divided on the crypto crash as the Star Wars faithful when discussing the Kenobi series. 

Four weeks after the Terra USD tokens (UST) collapsed dramatically costing investors billions of dollars, crypto investors are nervously watching the markets following the devastating news of one of the largest centralized lenders in the industry.  

Celsius Freezes Withdrawals Amid Run on Funds

Celsius, which achieved huge growth by offering great rates for crypto savings accounts, was a rocket ship in the bull market. But Celsius wasn’t just lending tokens, they seem to have been operating an investment portfolio which exposed them to additional risk. (They were probably also holding a lot of UST – double exposing them.) When the crypto market fell over the past weekend, Celsius simply didn’t have the assets they claimed to cover their user’s transactions.

Right now, Celsius is preventing withdrawals of funds from its customers and is vague about when this measure will end. “Due to these dire economic conditions, we have paused all withdrawals, exchanges, and transfers between accounts”, the company wrote in a memo posted to Medium. “We are taking this action today to be in a better position to honor our withdrawal obligations over time.”

How can you protect yourself?

No one can predict the future, which is why it’s so important to diversify your investment portfolio and be suspicious when things seem “too good to be true,” like Terra’s 20% interest for savings. 

Make sure to follow best practices in terms of diversity, keep your private keys secure, and don’t borrow more than you can afford. It’s a temporary setback, but it won’t last. After a time, faith will enter the market and you’ll get another chance. Most professional investment advisors recommend keeping no more than 5% of your portfolio in crypto.

Here’s the most important thing to remember as an investor: never panic. The fluctuating prices of cryptocurrencies is part of the risks, so keep that in mind. With the crash in crypto, we were reminded of why long-term investments are so important —if you can be patient and wait for the market to recover, the value of BTC, ETH and other cryptos will probably be a lot higher next year than they are tomorrow. 

Non-Custodial Is the Future

I sat down with AIKON CEO and ORE Core Contributor,  Marc Blinder to get his insights into the multiple crashes that have rocked the crypto community the last few months.

“Those of us who have been in this industry for a few years have seen major failures like what we’re seeing today. It is tragic for people who are losing their savings and I’m outraged that it’s happening. At the same time, we believe this will prove the value of AIKON’s more ethical approach where users control their own assets — which is known in the industry as ‘non-custodial.’ Non-custodial solutions give people ownership of their private keys and control of their own finances, so they can’t be locked out of their cryptocurrency or NFTs,” explains Blinder.

“Just like exchange failures of the past drove the adoption of Decentralized Exchanges (DEXs), we believe the failures of major centralized players like Celsius will prove why a non-custodial approach is necessary for the future of this industry,” he continues. We discussed how high-profile failures like this make the case for why it’s absolutely critical that infrastructure platforms — like AIKON’s ORE ID wallet creation solution — must be self-sovereign at their core to be truly trusted. 

“Once the dust settles from this disaster, it will be clear that the mass market needs tools that are as easy to use as Celsius, but decentralized and self-sovereign,” said Blinder.  He also shared his company’s plans to offer users easy access and an easy fiat onramp — and “we will give users the opportunity to benefit from this revolutionary technology without the risk of this kind of disaster.”