Opinion by: Lucas Kiely, CEO of Future Digital
The primary challenge facing crypto is its lack of quantifiable value, unlike traditional stocks, which renders it completely speculative. Furthermore, investors can engage in leveraged trading, potentially erasing billions in value overnight.
Proponents of the technology assert that blockchain’s innovative infrastructure provides value. However, there is scant evidence to support that this translates into real, tangible benefits for token holders.
Investors transitioning from traditional finance often find this perplexing. There is no price-to-earnings ratio for tokens, no supply chain to analyze, and essentially, nothing concrete at all. This aspect uniquely positions crypto among other asset classes: it is driven entirely by sentiment, which is frequently erratic.
Crypto represents the essence of a truly free market. Bitcoin (BTC) may be a notable exception, given its finite supply and the increasing dominance of sophisticated institutional investors. Yet, the majority of crypto tokens fluctuate in ways that are extremely hard to forecast, primarily driven by traders.
Confidence, access, and unlimited leverage
One could argue that many stock valuations also lack grounding in real value. For instance, tech giants like Apple, Meta, and Nvidia have seen inflated valuations for some time. However, aside from lofty price tags, these companies boast fundamentals such as earnings, cash flow, supply chains, and products. Most digital assets do not have this foundation.
Related: History indicates we’re gearing up for a robust bull market coupled with a hard landing
Conversely, crypto holds the allure of potentially life-altering returns, and sometimes, they indeed come to fruition. The success stories that persist on-chain and are shared across social media platforms mean that no investor can disregard the current $4.3 trillion market. However, in the largely unregulated crypto landscape, investors frequently act irrationally and make significant errors.
This often manifests as leverage. While leverage is a familiar concept in the investment sphere, it is regulated in traditional finance. For instance, the US Financial Industry Regulatory Authority limits retail margin accounts to a 2:1 leverage on equities, forex trading on leverage exists only on specialized platforms and adheres to strict limits, and derivatives are typically reserved for qualified investors.
A house of cards
In the crypto world, any investor can easily trade with 100x leverage or more on exchanges. This is increasingly problematic, especially with significant institutions now investing in crypto. This leverage free-for-all results in cascading liquidations that can erase billions of dollars from the digital asset market in mere hours, if not minutes.
Consider the mass liquidation event we experienced at the close of September 2025 and the beginning of October 2025. In the first instance, over $1.8 billion in leveraged positions was obliterated, and in the latter case, over $19 billion within hours. While speculation surrounds the true cause of the latter, it’s evident that leveraged long positions were caught in a liquidation cascade as sentiment shifted.
While some savvy traders capitalized on this spike in volatility, most crypto investors likely would have been stopped out of their positions before they had a chance to check their trading accounts. In crypto, these errors are far more impactful than in traditional finance due to the absence of regulations. These positions can collapse like a house of cards when market direction shifts, bringing down billions with them.
Let’s get smarter, faster
Crypto is evolving. We now see the engagement of the world’s leading asset managers and a more favorable regulatory landscape globally. However, it still lacks the protective measures necessary to avert catastrophic market events in the blink of an eye.
A significant portion of this can be attributed to the capacity for unlimited leverage, unrealistic expectations, and the entrance of institutions capable of swaying market movements with a single trade. Every crypto investor needs to adopt a more serious perspective regarding the market. The individuals who profited immensely from Bitcoin were fortunate, and we all know people who lost significantly more on Dogecoin (DOGE) than they gained.
Overconfidence — paired with excessive leverage — pose great risks to the industry now that it’s matured and larger players are entering the fray. Every investor must approach this new reality more systematically.
Opinion by: Lucas Kiely, CEO of Future Digital.
This article is intended for general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
