At the Wyoming Blockchain Symposium, Custodia CEO Caitlin Long warned of risks for traditional financial institutions amid an impending downturn in the cryptocurrency market.
Legacy Traditional Finance Models
Long noted that traditional financial models for risk management may become ineffective in the cryptocurrency space. She emphasized that the dynamics of the crypto market are drastically different from stocks and bonds, which have time buffers and mechanisms to handle crises.
Dangers and Vulnerabilities in Crypto Investing
The issue of liquidity risks in the crypto market was also raised. High levels of leverage may lead to a cascade of selling if major players begin to offload assets during price declines. Critics argue that such actions could negatively impact not only the cryptocurrency market but the broader financial system.
Future of Crypto Investments and Upcoming Tests
Despite optimism from investors, Long stated that a new bear market is inevitable, which will reveal the unpreparedness of major financial institutions for active participation in this space. Predictions indicate that many new crypto treasury companies may not survive the next price downturn.
Experts highlight that traditional financial structures must adapt to the rapidly changing cryptocurrency market to prevent major crises in the future.
