The crypto world is in turmoil right now. Over the past week, Bitcoin and Ethereum have both lost more than 15%, and the cryptocurrency market has wiped out nearly $200 billion in market value.
1. FTX triggers a tsunami in the crypto world
November 2, It was revealed that FTX was facing a liquidity crisis. Binance founder CZ also tweeted about the incident, stressing that Binance would sell all FTT in the account within a few months. No one could have imagined that this tweet became the last straw that overwhelmed FTX. Despite the dramatic announcement of FTX and Binance within 48 hours of their initial acquisition intentions. The next day, Binance announced it walked away from the table. With the bankruptcy of FTX, market panic began to spread, users began to question the existence of CEX, and Bitcoin and Ethereum also hit new lows after the epidemic.
As the chart above shows, the Bitcoin panic has reached pandemic levels.
2. The panic of FUD began to spread
With the fall of FTX, its related parties have suffered a lot. For example, Blockfi has issued an announcement that it cannot repay client assets on time. In addition, the solvency of other small and medium-sized exchanges has also been seriously distrust, and small and medium-sized exchanges have experienced a solvency crisis.
The market believes that all CEXs need to rewin the trust of their customer, and the "dark forest" argument has begun to reoccupy the crypto participants' minds. As the whistleblower of this crisis, Binance also facing a confidence crisis.
In order to regain their trust, centralized exchanges have released Merkel Trees to prove the total value of their assets.
The market believes that all CEXs need to rewin the trust of their customer, and the "dark forest" argument has begun to reoccupy the crypto participants' minds. As the whistleblower of this crisis, Binance also facing a confidence crisis.
In order to regain their trust, centralized exchanges have released Merkel Trees to prove the total value of their assets.
3. Can Huobi's assets survive the winter?
In response to this question, Huobi's official answer is direct and rapid: Huobi disclosure their reserve assets at around3.5 billion USD on November 13. We may believe that Huobi has not misappropriated customer assets at will, and has enough reserves to withstand the cold spring of crypto.
In addition, Huobi promises to perform another Merkle Tree Proof of Reserves audit with a third party within 30 days.
4. Can Huobi's growth beat this cold winter?
In the pre-Justin era, Huobi failed to maintain its No. 1 position in the industry due to regulatory pressure, but the Huobi brand was not untarnished. After Justin Sun came to Huobi, Huobi started boosting again.
(1) Focus HT
After Justin Sun entered Huobi, his first step was to pour resources to rebuild HT's reputation. This is also in line with the industry consensus: the increase in the exchange's Token price is the first step of the flywheel, and its price increase can increase transaction volume on the one hand, and reduce transaction slippage on the other hand.
(2) Cost reduction and efficiency increase
From the perspective of the LBO acquisition logic: after the LBO acquisition is completed, the shareholders want to sell at a better price or enjoy the company's growth for a long time. New shareholders usually use layoffs + austerity spending to strengthen the company's long-term endogenous value. We can conclude that after Huobi vigorously compresses all kinds of expenses, its cash flow must be getting stronger.
5. Bottom-line thinking examines
(1) From a historical perspective, Huobi has strong fundamentals
When the Shanxi incident occurred in 2020, Huobi insisted on allowing users to withdraw their tokens, unlike OK when they stopped withdrawing coins. After the incident, customers withdrew 5 billion US dollars.
When the Chinese users were forced to detach from the CEX by Chinese regulators in 2021, Huobi lost more than 20 billion US dollars in one night.
However, Huobi got through all these incidents with dignity.
(2) From the perspective of Huobi's trasaction, Huobi will keep resilient
Since Huobi has just completed the full delivery to Justin Sun, it must go through very strict due diligence, and the financial data is likely to be strong, and there is no problem with its liquidity.
(3) From the perspective of Justin Sun’s profit, Huobi needs to grow
Justin Sun has only entered in October, and he must hold a large amount of HT. It is obviously not in the best interest to sell them in a bear market. In addition, the market generally expects that the U.S. dollar will enter a bubble in 2023, and the market is expected to boost. It is obviously not in the best interests of Justin Sun to sell HT.
6. CEX will still be the backbone of the industry
At the moment when the FUD sentiment swept the industry, the market's distrust of CEX has been put on the table again, and the tokens of large exchanges have been sold off. But is this really the end of the industry? Is CEX doomed to have no meaning in existence? The industry recovery fund allows us to see the self-correction capability within the CEX system. Huobi will also participate in rebuilding CEX confidence and the Crypto industry.
As part of the Crypto community, we all firmly believe that decentralization and minimization of trust are the future directions of the industry. However, the CLOB order book of CEX is still the optimal solution for the current trading system. Although AMM 's genius concept has solved the liquidity of DEX, high slippage price and Gas Fee still restrict the further growth of Uniswap, and related problems may not be solved in the short term. In addition, the Makers of Uniswap V3 are also filled by professional players, which proves centralize is still play an important rule of DEX .
CEX can provide better products, and it is still the optimal solution for the current exchange.
7. The last of the last
All in all, I don't think Huobi's robustness and CEX 's long-term prospects should be questioned. On the contrary, the robustness of Crypto will be further strengthened after this crisis, and the prospects of CEX are still worth looking forward to.
Long May the Crypto!
