How the crypto apocalypse may begin: the stablecoins leverage problem
Many people believe quantum computers will make cryptocurrencies useless, but there is another big concern that could become reality sooner than we expect and it's called leverage. Traders and institutions are taking excessive risk in the crypto market reaching 100-to-1 leverage for cryptocurrency trades. 💥
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Also because of the high margin on their positions they are forced to sell when the price goes down. This is the reason why we saw 30% drop in bitcoin and other cryptocurrencies' prices, according to analysts. But there's more, nowadays a 8%-10% interest on stablecoins is considered normal but is it really a safe investment? ⚠️
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Companies like Blockfi, Gemini, Nexo... Invest your money in high-risk assets having low collaterals (because the crypto market is less regulated than the others). This could cause a new crysis in case the financial assets the exchanges invested on, starts go down for a long period of time. This is combined with the lack of any legal warranty over our deposits too! 📉