The Real Bitcoin Lesson to be Learned from the Celsius Panic
The market is a mess, and prices are dropping to points that many of us thought we would never see again. Black swan event after black swan event keep popping up and causing the market to have even more turmoil. First the pandemic hit and after each new strain of the virus appeared, that would send the market into a panic. Then came the FED, adjusting rates and putting fear in the market after inflation had taken storm. Next, came the Russia and Ukraine war would sent panic across the globe. A situation that could still develop into something even worse. If that wasn't enough, we would then see the collapse of UST and Luna. Surely, those would be enough black swan events to last us until the next bear market arrived, but now a new market panic has appeared. That is the impending insolvency of Celsius, a crypto lending and borrowing service that allowed users to earn a yield with their product. A product that I was a big fan of in the past, but thankfully had removed all of my funds off during the previous few months.
The situation with Celsius is still unresolved, but this is what we do know. They have put a freeze on all withdrawals, and swaps on their service. Which means that anyone who has any crypto on their service cannot currently get them off of Celsius. There had been heavy rumors for weeks that Celsius was going through a difficult time, and this resulted in their CEO, making the rounds of many of the biggest crypto YouTubers out there, to try to smash the FUD that was being thrown towards his company. As it turns out, that FUD was justified.
Now, it is entirely possible that Celsius will be able to remain solvent, and will be able to pay out all of the withdrawals to their users. It could be a case where the market took a turn, which caused a bank run. Celsius got caught in a jam where many of their funds where locked up in staking or other DeFi protocols that could not easily be made liquid. Over time, the users could be paid back. Although, especially with this market, there is just as good of a chance that Celsius could go under, resulting in users losing their funds.
Which brings me back to the main part of this article. People who have been in the crypto market for at least a year or more have definitely heard the phrase, "Not your keys, not your crypto." We have all heard it, but it is likely that many of us ignored it. Surely we wouldn't make any mistakes that would cause us to lose our crypto. Surely the market has evolved to the point where all the crypto services are big enough that they can be trusted. If Celsius does go under, this very well could be this generations Mt. Gox moment, and potentially even worse than that. This is the moment when people truly learned the importance of that phrase above.
And to be honest, this isn't the first time during the last 30 days that this has happened. When the market was panicking due to the LUNA and UST situation. Many of the services froze movements of these coins, and you couldn't withdrawal or sell even if you wanted to.
So the moral of the story is that once you have accumulated what you consider to be a significant amount of crypto. Learn about self-custody and then take self-custody of your crypto. My preferred method is by using a Ledger, but there are many other options as well. Nothing can prepare you for the heartbreak that would be losing all of the crypto that you worked so hard to accumulate. While many people have gotten blinded by the prospects of getting rich with crypto. Those same people have forgotten or are ignorant to why bitcoin was even created. To be our own bank, and to take custody of our own assets. So that we wouldn't need to depend on any other party.
Now is maybe the time that many of us will get back to the basics. That is what always happens when the bear market finally does hit. Like it or not, that is the moment when many BTC Maxi's are born, when projects do their best building, and when people actually learn the essentials of bitcoin and crypto. Take this time to improve your own skills. And remember that prices drops like these are the moments when portfolios are built. If you took advantage of the March 2020 crash, that could have been life changing for you. This crash, and however long it lasts, presents the same opportunity. Stay strong, go into survival mode and make sure that you don't get liquidated, that you have custody of your funds and that they are safe. While never taking your foot off the gas pedal in your accumulation.
How about you? Are any of your funds currently locked on Celsius? Do you take self-custody of your crypto?
As always, thank you for reading!
