What is a Crypto Contagion? - Crypto in Plain English - Episode 301 - by cryptohunt.it

What is a Crypto Contagion?

Welcome to the Cryptohunt Jam, where we spend one minute a day explaining crypto. In plain English.

You’ve seen the news: People fear a so-called "crypto contagion", which could cause the collapse of more crypto companies as a result of FTXs downfall. But what does the word mean, and why isn’t something like the FTX collapse more contained?

The word contagion comes from the world of biology: it describes that a disease spreads from one person to another.

And that’s exactly what we’ve seen happen in crypto markets a lot lately: One company goes down, and like they are infected by the same virus, others follow one by one.

This is because they are tightly financially entangled. Unlike product or service companies, in the world of finance the core business is moving money around. And when the source of that money goes bankrupt, it’s a big problem.

In the case of FTX, there are two such problems actually: First, it owes significant sums to other companies, and they simply won’t get it back. That debt can cripple them. And second, FTX was paying everyone with their FTT token, which went down to zero in value. So these companies made financial bets assuming their FTT holdings were worth enormous sums, and in the end they just weren’t.

That's why it is called a contagion. It’s bad all around. And in the end the buck stops with you, the little investor. So make sure to take control of your crypto before its too late. Tune back to last week’s episodes where we explained the process in depth.

And enjoy the Thanksgiving holidays, and keep an eye out for a little Cryptohunt surprise: We are launching a crypto certificate for you to take over the long weekend. You'll find it at www.cryptohunt.it. Have fun!

This podcast is produced by Cryptohunt.it the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, Design is done by Carmen Rincon and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.