Cryptocurrencies need to decentralize to survive

Bitcoin retracement below $ 20,000 on Wednesday [before rebounding to $21k] shows that there is still a lot more pain coming in the cryptocurrency markets, if not all markets.

This is largely due to [US banking system] the Federal Reserve once again leads the flow of news indicating that the US may, in fact, not be able to avoid a recession.

Apparently, “transient” inflation. [its chair] Jerome Powell rejected a few weeks ago is actually a stickier and more crippling situation that will need to address further interest rate hikes.

It is a precarious situation that will lead to the overthrow of a very shaky House of Cards in many areas of cryptocurrency. While we have seen many slowdowns in recent weeks, which has been brutal to say the least, investors are still heavily in debt.

As we’ve seen, it doesn’t take long for margin calls to kick in and mass sell events to occur. This is what we have seen with UST and it continues to work. Right now, we’re nowhere near the bottom.

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All of this should and MUST prove to be a lesson for the cryptocurrency world if it is to survive and thrive in this slump. We must remember that cryptocurrency was founded to be a decentralized monetary system designed by people for people.

It has since grown into something of a centralized monolith, with a few large companies now dominating the flow of trade. The emergence of decentralized finance in 2020 has somewhat changed this, but it is still a small part of the overall market and continues to face its own challenges in terms of technological strength.

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However, decentralization is the future. Right now we are seeing centralized giants under fire – Celsius, of course – with others ready to potentially follow in his footsteps. Even UST was not a fully decentralized enterprise, with a very large personality and a few whales dictating its final rise and fall.

As long as these large centralized entities are led by people and companies interested only in themselves, cryptocurrencies will not achieve their ultimate goal. Nor will cryptocurrency reach its ultimate goal if we continue to use the US dollar – which is facing its own dramas right now – as the only measure of value.

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The NFT arena features some light at the end of the tunnel here, as this is an area that has gone almost entirely through the evaluation of everything it does in ETH. In this space, psychological disconnection allows participants to distance themselves from what is happening in major markets and the largest cryptocurrencies.

It’s an interesting development that we should all be watching very closely. Meanwhile, most investors should continue easing and expect more drama until the end of the summer at least.

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