Up till maybe 3 days ago, I had full confidence of my funds in FTX.
My thought process went something like this:
- FTX is the largest exchange I had access to since Binance and Coinbase do not operate in Singapore
- If FTX really fails, no retail will be able to on/off-ramp the funds with confidence anymore
- Most retail (like me) will only be comfortable self-custodying through cold wallets up to a certain amount
- Retail and maybe even institutions would then be driven away for at least the short to medium term
- So if I thought FTX was gone, I might as well leave the crypto space entirely
With a balance sheet hole and a bank run, the worst has sort of happened over the past 72 hours and about 1-2 hours ago, Binance (CZ) has walked away from the proposed FTX deal. The rumours/odds of Temasek stepping in probably vanished totally as well. Which is fair, as I cannot imagine a state using tax-payers’ money to bail out international investors.
Users with funds left on FTX will likely lose most of it.
I am also not sure how much of a “win” it is for those that withdrew everything from FTX in time. BTC and ETH are nuking at this very moment, not to mention “Sam coins” like SOL and FTT.
My ideal allocation for storing funds and crypto in centralised exchanges vs self-custody went from 50/50 to 20/80 post-Luna and 10/90 post-Hodlnaut.
Yes, I kept that 10% on FTX, assuming that was the safest centralised custody. Two days ago, I executed my DCA for November to buy more BTC and ETH. Since Crypto Twitter was raging about SBF and I was still suffering from some PTSD from Luna, I decided to be a bit more prudent.
I withdrew all my BTC and ETH, leaving behind some stables (for next few month’s DCA) and my staked SOL and FTT.
The direct loss to FTX is not that significant in the end, probably a month’s salary. I lost way more through “staked Luna” but I could attest that to both folly and greed. 20% UST yields always sounded too good to be true and I was greedy not to have taken more profits after making a >5x on Luna.
This FTX bankruptcy has left me much more shaken.
I expect crypto to bottom further as more and more people leave but I do not have the balls to short it.
As a % of networth (including home equity), crypto is now approaching <5%, similar to HK stocks. Pretty irrelevant. The irony is not lost on me that exactly one year ago, when crypto was 20-30% of networth, I felt underweight. Lemmings falling off the cliff right now.
I am probably down a year’s income for crypto and half that for HK stocks. These are my biggest paper losses to date and I can finally appreciate why older folks talk about “chopping off fingers” and never touching the stock markets again.
Our “wrong beliefs” on the quality of certain financial instruments can really mess up our psyche, as I have found out recently.
Yes, I am capitulating, in the sense that I will not be adding to my crypto stack anytime soon. I mean, which exchange can I trust to on-ramp at this moment? Crypto.com? Gemini? Nah.
Maybe this is a bottom-indicator but I seriously do not care. Call me a crypto tourist if you must.
If BTC/ETH ever goes back to ATHs, I should still have enough to benefit from it and recover my capital.
If BTC/ETH goes to zero, it is an amount that I am prepared to write off. Painful, yes, but not debilitating since I can always work for a few more years to earn it back.
I still believe in crypto’s core mission to provide an outlet away from total financial surveillance from the state. But right now, the leaders of this industry are failing terribly, which really leaves a sour taste in the mouth.
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Hey,
Just wanted to say you’ll bounce back! In my view, we are heading into a potentially long recession, investing like 15HWW of the old would probably yield you some juicy returns (nothing like Luna 5x though).
I’ve been skeptical of crypto only because I’ve experience something similar; live and learn my friend 🙂
Best,
JW
Hi JW,
Thanks for the encouraging comment.
Actually, even in 2020 and 2021, I was still investing 80 to 90% of my funds pretty conservatively. I basically do not have the risk tolerance to allocate even 50% of liquid networth in crypto.
This latest episode will be a good lesson to do better due diligence!
i keep mine at CDC, hope it work well.
cause actively using their debit card.
Hi Adrian,
At this point in time, my advice would be to withdraw or sell the majority of your coins on CDC.
No matter what you do, I hope you will come through relatively unscathed.
sorry to read this article. crypto is too dangerous. be careful. Stay mentally well. Very important.
“I still believe in crypto’s core mission to provide an outlet away from total financial surveillance from the state. But right now, the leaders of this industry are failing terribly, which really leaves a sour taste in the mouth.” Agree with you 101%. Crypto reminds me of people marketing “gold” in multi-level sale marketing.
Hi May,
You made a v strong point.
That is also why I very much prefer physical gold to any other forms of gold.
I started buying into crypto just before the late 2017 run up, albeit with a small amount. 10k became more than 100k but I wanted more. In the end the 100k became less than 1k within a span of 1 year. I went away for a while as my first born arrived in 2018. Put in another 60k just before the 2nd run up mid last year. Started dabbling with margin. The 70k has been totally written off. I removed all the crypto apps and decided to just concentrate on my conventional portfolio. It’s too exciting for me.
Given more time, I believe people will forget about all these exchange bankruptcy and the next run up will happen again. More crypto millionaires will be minted again.
all the best.
Hi HRI,
Thanks for sharing your experience.
There’s a part of me that assumed that if I was early enough, I would also be a crypto millionaire.
I guess that’s just wishful thinking on my part. Most likely, I would have shared a similar path to you even if I had started dabbling in crypto pre-2018.