Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnSquareMore
Wall Street Isn’t Ready for the Next Crypto Crash, Custodia CEO Warns

Wall Street Isn’t Ready for the Next Crypto Crash, Custodia CEO Warns

Coindoo2025/08/25 06:55
By:Coindoo
Wall Street Isn’t Ready for the Next Crypto Crash, Custodia CEO Warns image 0

Institutional investors may not be as prepared for the crypto market as they think, according to Custodia Bank CEO Caitlin Long.

Speaking at the Wyoming Blockchain Symposium, Long cautioned that Wall Street’s traditional models for managing risk could fall apart once the digital asset market turns bearish again.

“Big Finance has arrived in force, and it’s steering this cycle,” she noted, adding that while enthusiasm is strong, many institutions underestimate how different crypto markets are compared to stocks or bonds.

Legacy Tools Don’t Work in Real-Time Markets

In traditional finance, banks and funds rely on backstops like discount windows and delayed settlement mechanisms. These cushions allow firms to carry heavy leverage without immediate fallout. But crypto runs on real-time settlement, and Long warned that this removes the safety net. “It’s a different beast,” she said, predicting that liquidity crunches could catch unprepared firms off guard when volatility spikes.

Long, who has been active in crypto since 2012, stressed that another bear market is inevitable despite optimism from some newcomers. She believes it will expose the lack of readiness among large financial players diving into Bitcoin and other digital assets.

The Risk of Contagion

The rise of institutional treasuries holding Bitcoin and Ethereum has defined the current cycle, bringing mainstream credibility but also new vulnerabilities. Critics argue that if highly leveraged firms start selling during a downturn, the resulting cascade could rattle not just crypto but the broader financial system.

Chris Perkins, president of CoinFund, echoed these concerns. He pointed out that while crypto requires constant risk rebalancing, legacy markets take weekends and holidays off, creating a dangerous mismatch. “That’s how liquidity crises start,” he said.

Bear Market Stress Test Ahead

A recent report from venture capital firm Breed added fuel to these warnings, claiming many new Bitcoin treasury companies will likely collapse in the next downturn. With lower prices and excessive leverage, Breed predicted a feedback loop of forced selling that would deepen losses across the sector.

Despite the risks, Long emphasized that crypto’s real-time transparency remains its strength. The question is whether traditional institutions, built on slower-moving systems, can adapt before the next crash.

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Earn new token airdrops
Lock your assets and earn 10%+ APR
Lock now!

You may also like

2025 TGE Survival Ranking: Who Will Rise to the Top and Who Will Fall? Complete Grading of 30+ New Tokens, AVICI Dominates S+

The article analyzes the TGE performance of multiple blockchain projects, evaluating project performance using three dimensions: current price versus all-time high, time span, and liquidity-to-market cap ratio. Projects are then categorized into five grades: S, A, B, C, and D. Summary generated by Mars AI This summary was generated by the Mars AI model, and the accuracy and completeness of its content are still being iteratively updated.

MarsBit2025/11/28 16:26
2025 TGE Survival Ranking: Who Will Rise to the Top and Who Will Fall? Complete Grading of 30+ New Tokens, AVICI Dominates S+

Mars Finance | "Machi" increases long positions, profits exceed 10 million dollars, whale shorts 1,000 BTC

Russian households have invested 3.7 billion rubles in cryptocurrency derivatives, mainly dominated by a few large players. INTERPOL has listed cryptocurrency fraud as a global threat. Malicious Chrome extensions are stealing Solana funds. The UK has proposed new tax regulations for DeFi. Bitcoin surpasses $91,000. Summary generated by Mars AI. The accuracy and completeness of this summary are still being iteratively updated by the Mars AI model.

MarsBit2025/11/28 16:26
Mars Finance | "Machi" increases long positions, profits exceed 10 million dollars, whale shorts 1,000 BTC

How much is ETH really worth? Hashed provides 10 different valuation methods in one go

After taking a weighted average, the fair price of ETH exceeds $4,700.

ForesightNews 速递2025/11/28 15:05
How much is ETH really worth? Hashed provides 10 different valuation methods in one go

Dragonfly partner: Crypto has fallen into financial cynicism, and those valuing public blockchains with PE ratios have already lost

People tend to overestimate what can happen in two years, but underestimate what can happen in ten years.

深潮2025/11/28 14:53
Dragonfly partner: Crypto has fallen into financial cynicism, and those valuing public blockchains with PE ratios have already lost