Will Crypto Collapse?

The fall of crypto exchange FTX has led some people to wonder what it would take for the whole industry to collapse. The total market cap of cryptocurrencies is currently $820 billion. That is 70% below the peak of a year ago. When high-profile players like FTX tumble, the whole crypto idea can sometimes appear in peril.

Yet, the value of crypto is still remarkably high compared with most of its history. The value of the crypto market is higher than at the start of 2021, for example, and any point before then, including the peak of the bull market in 2017.

For those worrying about the existence of crypto, some analysts say the only way to kill the industry is if everyone were to stop using it. This is highly unlikely once you understand how the system works. 

Beyond the retail traders, there are many thousands of entrepreneurs who have a stake in crypto. Major blockchains that underpin Bitcoin and Ethereum have incentivized enough miners to build their own tokens and applications. These include stablecoins and tokens that handle some of the background crypto work like decentralized-finance protocols. 

Big and small businesses have been built up as part of the crypto ecosystem, including applications, functional tokens, exchanges, investment funds and lending platforms.

For crypto to die completely, it would require all the underlying layers of support to give way, too. Unraveling the proof-of-work or proof-of-stake chain that underpins crypto would be extraordinarily difficult.