these cryptos should be avoided amidst ftx collapse

Cryptos to Avoid After the FTX Collapse: Navigating the Red Sea

The FTX collapse sent shockwaves through the cryptocurrency market, leaving investors reeling. Bitcoin [BTC], the world’s largest crypto dropped to mid $15K. While most assets were drowning in the red sea, several jumped on to “buy the dip.” But investors need to proceed with caution. The fallout from FTX has exposed critical vulnerabilities in centralized crypto finance (CeFi) and highlights the importance of due diligence.

Growing Mistrust and the Flight to Safety

The most immediate effect of the FTX debacle is a wide-spread panic on the markets and growing mistrust of centralized crypto finance, or CeFi. In short to mid-term, many CeFi users will withdraw their funds to self-custody solutions, seeking greater control and security. This shift underscores the need to carefully evaluate any platform where you store your crypto.

Lessons from FTX: Which Cryptos Are Most Vulnerable?

Exploring the industry in light of the FTX collapse necessitates a detailed understanding of risk. Small crypto companies would not be unduly burdened by regulation, but companies like FTX – valued at more than $30 billion at its height in 2025 – would be obliged to operate with greater transparency and accountability. Consider the following when evaluating potential investments:

Cryptos with close ties to FTX: Assets heavily promoted or deeply integrated within the FTX ecosystem are likely to face continued downward pressure.
CeFi platforms with questionable transparency: Exercise extreme caution with platforms lacking clear audit trails, proof of reserves, and regulatory compliance. Take 10 Ways Binance Can Avoid The Disastrous Fate Of FTX into consideration when analyzing exchanges.
High-risk, high-yield DeFi protocols: The collapse exposed vulnerabilities in complex DeFi strategies. Avoid those with unaudited code, excessively high yields, or opaque governance.

The FTX Token (FTT): A Speculative Gamble

Investors are speculating on the return of the FTX crypto exchange and some kind of value for the token. The FTX Token has tripled in about a week, but that doesn't mean it's a sound investment. This is highly speculative and carries significant risk. The future of FTT is uncertain, and it should be approached with extreme caution.

Building a More Resilient Crypto Future

Rather than waiting for regulators to write rules that may not be effective, the industry should harness existing cryptographic tools to enforce compliance and demonstrate trustworthiness. A focus on decentralized solutions and verifiable on-chain data is crucial for rebuilding trust in the cryptocurrency space. Focus on cryptos with demonstrated transparency, strong development teams, and a commitment to security.

Disclaimer

This is not financial advice. Cryptocurrency investments are inherently risky. Always conduct thorough research and consult with a qualified financial advisor before making any investment decisions.

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