So far this year, we’ve seen crypto firms like Celsius, Three Arrows Capital, and Voyager Digital go belly up.
And there’s a good chance we’ll see more dominoes fall in the crypto space before the end of the year.
The collapse of these centralized crypto firms has caused many investors to flee the space. And once again, skeptics are out in force… questioning whether crypto will survive as an asset class.
I can tell you unequivocally that it’s here to stay. As Daily editor Teeka Tiwari often says, bitcoin has reached escape velocity.
Of course, every time bitcoin and the overall crypto market crash, the grave dancers come out of the woodwork. And the weak hands inevitably sell into the panic.
But once again, they will be proven wrong.
In today’s essay, I’m going to show you how greedy Wall Street insiders once again left Main Street holding the bag.
But despite the setbacks the actions of a few individuals caused, blockchain technology isn’t going away. In fact, it’s getting stronger each day.
You see, the root cause behind the sell-off triggered this summer had nothing to do with blockchain technology or bitcoin.
What we saw was a credit crisis… Not a bitcoin crisis.
Who’s Responsible for This Mess
The problem the crypto industry has been facing stems from overleveraged positions, extended risk-taking, and reckless lending by centralized finance (CeFi) platforms.
CeFi firms like Celsius and Voyager took deposits from the public and lent them to hedge funds to generate yields… without safe levels of collateral to back those loans.
As it turned out, many of these hedge funds were taking on an absurd amount of risk… Far more than anyone anticipated.
When their bets went awry, they couldn’t repay their loans – leaving massive holes in the balance sheets of the CeFi lending platforms.
And as the debts began to sour, it sent a cascade of margin calls throughout the space.
It was crypto’s “Lehman Brothers” moment. Every major lender began recalling loans since no one knew who was exposed.
The forced selling crippled Celsius and Voyager. Both companies have filed for bankruptcy.
The silver lining of this shakeout is it highlighted the differences between CeFi and DeFi (Decentralized Finance).
You see, centralized platforms like Celsius and Voyager are private companies. They’re opaque. We have no way of knowing how much risk they are taking.
DeFi protocols are open and transparent. You can see exactly what’s happening under the hood at all times.
DeFi lending works by taking collateral and issuing loans against it. To manage risk, these protocols require the collateral’s value to be greater than the amount borrowed.
If your collateral falls below a certain threshold, you’re liquidated.
DeFi doesn’t care about your background, social status, or who you know.
It doesn’t take risky bets on the assumption that a hedge fund is good for its word.
Today, major DeFi lending platforms continue to function exactly as intended – without the liquidity and credit issues that doomed several lending platforms over the past few months.
DeFi is built on blockchain technology and aims to make banking, borrowing, lending, and investing more accessible, cheaper, and profitable for millions of people.
Today, DeFi apps allow users to trade, lend, and borrow billions of dollars in assets without human intervention. Many of these DeFi protocols have continued to work flawlessly despite the volatility.
Of course, the prices of their underlying tokens have suffered along with the overall market – but we expect them to recover with the overall market… Especially as investors look for more transparent lending platforms.
Despite the recent setbacks, DeFi has proved it’s a much-needed innovation that’s here to stay. And that’s why we’re still invested in this area of the crypto markets.
Crypto Is Here to Stay
Even amid this pullback, we still see tremendous growth and innovation in crypto.
During the first half of 2022, $30.3 billion in funds were raised to invest in the crypto space. That’s more than the $30.2 billion raised in all of last year.
Two recent fundraising rounds include big names like Andreessen Horowitz (A16z) and Multicoin Capital.
In late spring, A16z raised $4.5 billion in its fourth funding round. It’ll use these funds for blockchain and Web3 projects. A16z has now raised more than $7.6 billion.
And back in July, Multicoin Capital raised $430 million. It’ll use the funds to grow decentralized autonomous organizations (DAOs) and develop Web3 projects.
So despite the meltdown we’ve witnessed in CeFi, DeFi remains strong.
Today, over $57 billion in assets are exchanged, borrowed, and lent directly on DeFi protocols that operate without centralized middlemen. That’s incredible growth considering DeFi was virtually nonexistent in 2017.
Plus, we’re seeing tremendous, innovative uses for blockchain technology.
For example, an infrastructure firm in South Africa is building a new water delivery infrastructure system. It’ll use blockchain tech to improve the funding process. This will get water to those who need it faster.
And when we look at the use cases of non-fungible tokens (NFTs), we see even more blockchain applications. Remember, NFTs allow you to own a unique digital asset on the blockchain that only you control.
Hotels are using NFTs to create a “StubHub,” or secondary market, for lodging reservations. If you can’t make it to your trip, you can resell your reservation to another person. It’s like reselling tickets to sports events or concerts.
And last year, we saw the TV show Stoner Cats sell NFTs to raise funds. It featured A-list actors like Ashton Kutcher and Jane Fonda. This will open the door to being able to own a stake in your favorite TV shows down the road.
Nearly every big-name brand is scrambling to get involved in the NFT market one way or another…
From food and beverage heavyweights like Coca-Cola and McDonald’s to fashion companies like Nike and Gucci… They’re all making strides in the NFT space.
Through the first half of 2022, over $17 billion in NFTs have traded hands on exchanges. That’s over 27 times the $637 million that traded hands in the first half of 2021.
And this is just the beginning.
As you know, Teeka believes nearly every asset class in the future will be tokenized. And the unique items will be tokenized as NFTs… From in-game assets to apartment buildings that generate income and even big-ticket collectibles like classic cars.
It’s a massive opportunity we believe will turn into a trillion-dollar market.
Even if only 0.5% of the $280 trillion real estate market is tokenized, that would be a $1.4 trillion industry in itself.
Bottom line: Blockchain technology is here to stay. And it will only get stronger as developers continue to build innovative products that attract billions of users.
This Will Be a Great Buying Opportunity
If you missed out on the crypto bull runs of 2013, 2017, and 2021… Teeka says to view this current pullback as an “in-game” reset.
Here’s how he recently put it…
The crypto market cap hit an all-time high of $3 trillion in November 2021. Right now, it’s around $1 trillion. If it just rallies back to its previous high, that’s a 200% increase from today.
Eventually, I believe just bitcoin alone will rival gold’s total market value of $11 trillion. That’s a 1,000% increase from today’s levels.
I don’t believe any other asset class offers that kind of upside potential. That’s why I call this pullback an “in-game” reset.
But we’re not quite out of the woods yet. We’ve seen a lot of volatility over the past few months. And in times like these, it pays to be patient.
We want to ensure the worst is behind us before diving back in… Even if that means buying at slightly higher prices.
By waiting for the dust to settle, you’ll be able to sleep better at night.
Analyst, Palm Beach Daily
P.S. If Teeka’s latest research is correct, we won’t have to wait long for the dust to settle.
We could see the crypto market surge higher in the coming months… and it’s all thanks to catalyst that’s made him extremely bullish about bitcoin for the first time this year.
It has nothing to do with Ethereum’s Merge or a bitcoin halving… and all but the heaviest hitters in finance are even talking about it right now.
But investors that prepare for it ahead of time could have a shot at collecting a five-figure monthly income from just a handful of crypto investments.
That’s why Teeka is hosting a free online event Wednesday, September 21 at 8 p.m. ET, where he’ll reveal…
Exactly what’s happening…
Why this market event has left him wildly bullish on crypto in 2022…
And how a handful of $250 crypto investments could set you up for monthly crypto income of $10,000 or more.
This will be Teeka’s first LIVE crypto event of the year, so you don’t want to miss it.
Click here to reserve your spot.