Coinbase custody represents a systemic black swan
The discussion highlighted a major security breach or loss of custody at Coinbase as one of the most catastrophic systemic risks to the cryptocurrency market.
The argument
The speakers argued that because major entities like MicroStrategy and various spot ETFs rely on Coinbase for custody, any failure there would create a severe domino effect across the entire asset class. However, the guest noted that if such an event occurred, it would ultimately represent a long-term buying opportunity once the market bottomed.
The thesis, stress-tested
✓ What validates it
- ✓Reports of security vulnerabilities at major custodians
- ✓Regulatory changes forcing diversification of ETF custodians
▸ Risks discussed
- ▸Concentration of institutional custody in a single entity
- ▸Potential security breaches or hacks
Hear it yourself
"It's, like, 60 and a half now. So even if we revisit the two hundred week, it's not gonna be a lower low. But the other thing is once you get to 95, the bears are kind of they're kind of in trouble. Right? And you've already given up the 60 to 95. So by the time we get above 95, every man and his dog is gonna agree it's a bull. I try to work backwards and say, well, if we get through 78 and by the way, I don't expect we'll do this the first time ever. It's always gonna take a series of whacking our head against the ceiling."
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