Annoying Insight from a Finance Company for This Bitcoin Exchange!

Annoying Insight from a Finance Company for This Bitcoin Exchange!
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Annoying Insight from a Finance Company for This Bitcoin Exchange!

In the wake of the FTX crash, investors are asking important questions about the long-term future of centralized exchanges. In particular, Binance’s $ 1.4 billion Bitcoin exit in just 24 hours has released the FUD.

Central Bitcoin exchanges are on the agenda with FUD news

One of the biggest debates going on in the crypto world right now is centered around Binance. In the wake of the collapse of rival FTX, a tremendous amount of horror, uncertainty and doubt (FUD) is swirling around Binance. The implication is that Binance is the next domino to drop.

Against this backdrop, Changpeng “CZ” Zhao, the founder and CEO of Binance, is publicly taking dramatic steps to quell investors’ concerns. It tries to show that Binance is a credible business built for the long term. But the questions remain. Could Binance be in danger right now?

Annoying Insight from a Finance Company for This Bitcoin Exchange!

Transparency and accountability

The leading exchange has emerged as a champion of transparency and accountability for crypto institutions. Last month, Binance introduced more control, more regulation, and more advocacy calls for individual investors. Binance says the goal should be “stable and clear” regulations for crypto.

Moreover, Bitcoin has shown considerable transparency when it comes to its own financial health. Recently, Binance carried out a third-party control over Bitcoin assets. The results showed that the president exchange’s entire Bitcoin is highly collateralized. Therefore, this clears multiple concerns with Binance, as it does with FTX. Still, there is some trepidation about how extensive this control is. However, it shows that Binance feels like it has nothing to hide.

Diversified Binance ecosystem

Also, a valuable point in Binance’s favor is that it has an expanding ecosystem around the world. Many casual investors are unaware that Binance is both an exchange and a Blockchain ecosystem. This is very different from Coinbase, which only exists as a cryptocurrency exchange. Therefore, by investing in Binance, you gain access to the full potential of Binance Blockchain.

Annoying Insight from a Finance Company for This Bitcoin Exchange!

To give you an idea of ​​how comprehensive this ecosystem is, consider that Binance is quickly at the center of almost every major crypto event in 2022. Binance took the lead as financial institutions looked for ways to help Ukraine in February. When Terra Luna burned down in May, Binance offered to list Terra Luna 2.0 on its exchange. When FTX collapsed, Binance offered to provide the market with the necessary liquidity. Binance even found a way to be involved in Elon Musk’s $44 billion purchase of Twitter. He provided $500 million in financing to one of the wealthiest people in the world.

Too big to make mistakes?

When investors talk about the classical financial system, they often talk about some institutions being “too big to fail.” The same phenomenon occurs in the crypto market. The crypto market can handle the collapse of FTX as well as the collapse of a number of high-profile cryptos. But Binance may be too big to fail. If you take down Binance, the entire crypto market could collapse with it. That’s why Fool analysts hypothesize that while this is pure speculation, a mix of regulators, government officials or crypto financial institutions will step in at some point to prevent Binance from melting down completely.

Annoying Insight from a Finance Company for This Bitcoin Exchange!

Of course, this does not mean that Binance will not fail. For example, many experts thought Lehman Brothers was “too big to fail” in 2008. But Lehman went bankrupt, causing a precious event that triggered the financial crisis. As such, Binance has many paths to failure. The first is speculation that US officials may be going after Binance for money laundering. There is also speculation that Binance USD, the official stablecoin of the Binance ecosystem, could explode and topple Binance.

A long-term risky bet

At the end of the day, the decision to invest in Binance is indeed a bet on the long-term future of crypto. If you think the industry’s biggest players will survive the crypto winter, Binance is worth a closer look. Binance is currently the giant of the crypto market and also the fifth largest crypto by total market cap.

However, before considering Binance as a long-term purchase, it is worth paying attention to some risks. Things got a lot darker in the crypto world with the arrest of Sam Bankman-Fried in the Bahamas. Therefore, no one can confidently say what will happen next.

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