Perspective by: Lucas Kiely, CEO of Future Digital
The primary challenge facing crypto is its lack of measurable value compared to traditional stocks, rendering it highly speculative. Additionally, investors can use leverage in ways that can drastically devalue assets in a matter of moments.
Proponents of the technology argue that blockchain’s innovative framework offers inherent value. However, there’s scant evidence that this leads to genuine, tangible benefits for tokenholders.
Many professional investors transitioning from traditional finance often find this perplexing. There’s no price-to-earnings ratio to track for tokens, no supply chains to follow, and essentially, nothing concrete to hold onto. This is what sets crypto apart from other asset classes: it is entirely influenced by market sentiment, which can often be erratic.
Crypto embodies the essence of an unregulated market. Bitcoin (BTC) may be an anomaly due to its limited supply and the increasing presence of institutional investors in its ownership. Nonetheless, the majority of crypto tokens fluctuate in unpredictable ways, primarily influenced by traders.
Trust, access, and unrestricted leverage
One could argue that many stock valuations are equally devoid of true value. Indeed, the valuations of tech giants like Apple, Meta, and Nvidia have been inflated for quite some time. Yet, aside from inflated price tags, these companies still have fundamental aspects like earnings, cash flow, supply chains, and tangible products. Most digital assets lack these underpinnings.
Related: Historical trends suggest a strong bull market ahead with potential hard landings
At the same time, crypto offers the potential for transformative returns, and occasionally, these returns do materialize. The visibility of success stories onchain and their spread across social media ensures that no investor can overlook the current $4.3-trillion market. However, in the largely unregulated arena of crypto, investors frequently act irrationally, leading to significant errors.
This tendency often manifests through excessive leverage. While leverage is a familiar concept in investing, it’s typically regulated in traditional finance. For example, the US Financial Industry Regulatory Authority restricts retail margin accounts to 2:1 leverage on equities; forex trading on margin requires specialized platforms with strict limits; and derivatives are usually limited to qualified investors.
A fragile structure
In crypto, however, any investor can easily engage in trades with 100x leverage or more on exchanges. With the increasing involvement of major institutions in the crypto market, this poses a significant problem. This unrestricted leveraging leads to chain reactions of liquidations, erasing billions of dollars from the market in mere hours, if not minutes.
Take note of the widespread liquidation events that occurred in late September 2025 and early October 2025. In the former event, over $1.8 billion in leveraged positions was lost, while in the latter, more than $19 billion evaporated within hours. Although speculation runs rampant regarding the true causes of the latter, it is evident that leveraged positions were caught in a wave of liquidations when market sentiment shifted.
While some astute traders benefited from this surge in volatility, most crypto investors likely found themselves liquidated before they could even access their trading accounts. Mistakes in crypto often carry heavier consequences than in traditional finance due to the absence of rules. These positions collapse like a frail structure when market trends reverse, dragging billions down with them.
Let’s be more astute and agile
Crypto is undergoing transformation. The world’s leading asset managers are now active, and there’s a more favorable regulatory landscape globally. However, it still lacks robust safeguards to prevent massive market upheavals instantaneously.
A significant part of this issue lies in the unrestricted leverage, high expectations, and the entry of major players who can sway the market with a single transaction. Every crypto investor should start to approach the market with greater seriousness. Those who profited from Bitcoin merely got lucky, and we all know people who have lost significantly more on Dogecoin (DOGE) than they gained.
Excessive confidence — and over-leveraging — pose considerable threats to the ecosystem now that it has matured and major entities are circling. Every investor must adopt a more systematic approach that recognizes this new landscape.
Perspective by: Lucas Kiely, CEO of Future Digital.
This article serves general informational purposes and is not intended to be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
