Institutional investors in the world of traditional finance do not have the updated risk tolerance models to face the crypto and can be confronted with trouble during the next bear market, according to the CEO of Custodia Caitlin Long.
“Big Finance is largely here, and that seems to lead this cycle. I suspect that it will continue to drive this cycle,” the CNBC on Wyoming Blockchain Symposium on Friday.
Long said that the inherited financial institutions are comfortable taking large quantities of leverage due to integrated failures in the system, such as windows at reduced prices and other “fault tolerances”.
However, she warned that these advantages disappear in the crypto, where the regulations occur in real time. The CEO said that the inadequacy between crypto and inheritance systems could create a liquidity crisis for these institutions:
“These types of defect tolerances are integrated into the system for inherited reasons, where systems did not update in real time. In crypto, everything must be in real time, and it’s just a different animal.
I am concerned about the way these Titans of finance react when the bear market inevitably returns. I know some who are optimistic and who think it will not come back. I have been there since 2012, so I know it comes back, ”she added.
Institutional investors, including cryptographic cash companies, were the most important characteristic of the current market cycle.
Some investors consider this to be a positive development that has advanced adoption, while others warn that overvalued and inexperienced companies will pour the crypto during the next cryptography bears market, triggering a contagion that spreads in the financial system.
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The CEO of Gustodia echoes concerns largely susceptible to industry leaders and analysts
“The greatest systemic risk in the future is the fact that you have an ecosystem that manages risks and rebalancing in real time and another ecosystem that takes weekends, nights and holidays,” said Chris Perkins, president of the Coinfund investment company.
https://www.youtube.com/watch?v=zad4fima-oq
This inadequacy between the settlement mechanisms can trigger liquidity problems, which are behind all financial crises, said Perkins at Cointelegraph.
In June, the venture capital company (VC) Breed published a report concluding that most new Bitcoin cash companies (BTC) would not survive the next market slowdown.
The venture capital company has warned that the overvaluation and the drop in prices of assets will create a vicious circle which obliges these cash companies to empty their assets on the market, further depressing the cryptography market.
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