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Why Cosmos, Tezos, and FTX tokens Are Experiencing Sharp Sell-offs Today

By Zhiyuan Sun – Sep 20, 2021 at 4:07PM

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The cryptocurrency sector is experiencing a sharp correction. Should you be worried?

What happened 

Any asset remotely related to decentralized finance is not having a good day Monday. Cosmos (ATOM -1.63%)Tezos (XTZ 0.01%), and FTX (FTT) are down 17.12%, 22.26%, and 11.02%, respectively, in the past 24 hours as of 2:54 p.m. EDT. They are now trading at $36.13, $5.32, and $54.50. As with life in general, good news tends to come out slow and steady, while bad news tends to fly out suddenly and in droves.

First, chairman Gary Gensler of the U.S. Securities and Exchange Commission said on Sept. 14 that many DeFi tokens were trading as securities, thus requiring regulation. Then, there was the announcement on Sept. 18 that the Commodity Futures Trading Commission was probing Binance, the largest cryptocurrency exchange in the world, over allegations of insider trading. Then, on Sept. 20, Christine Lagarde, president of the European Central Bank, criticized altcoins as being highly speculative and suspicious. If that wasn't enough, on the same day, the SEC threatened to sue Coinbase Global, the second-largest cryptocurrency exchange in the world, if it went ahead with plans to introduce cryptocurrency lending. 

Red price quote data appearing on a brokerage account.

Image source: Getty Images.

So what 

Inter-blockchain communications protocol Cosmos has its fair share of exposure to the DeFi sector, with projects like stablecoins and leverage-trading tokens being developed on its network. Meanwhile, Tezos is a smart-contract network that has partnered with DeFi platform EQIFI to accelerate the adoption of decentralized banking. Finally, FTX remains the most exposed of them all. Users can use FTT tokens for direct leverage and collateral to trade on the FTX exchange, the fifth-largest in the world.

Now what 

Despite all the regulatory fear, uncertainty, and doubt, no regulatory sanctions have occurred for any of these tokens, and it's business as usual for them. The Cosmos ecosystem has been booming, with over 780,000 transactions in the past 30 days alone. Most of the volume came from providing liquidity or trading tokens compatible on multiple blockchains. 

As for Tezos, its network has been gaining significant traction among European banks for its smart-contract functionality. Finally, FTX is best poised for a turnaround as its developers have made complying with regulations a top focus. Last month, acquired Ledger X, a CFTC-regulated cryptocurrency derivatives and futures trading platform. On Sept. 20, the exchange also received regulatory clearance to expand into the Bahamas. For investors who are brave enough to look past all this chaos, now's an opportune time to buy the dip

Zhiyuan Sun owns shares of Cosmos. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Farmatrust Stock Quote
Coinbase Global Stock Quote
Coinbase Global
$41.93 (-8.85%) $-4.07
Tezos Stock Quote
$1.01 (0.01%) $0.00
Cosmos Stock Quote
$10.08 (-1.63%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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