Beware the chaos of today’s anarchic cryptocurrency markets. Better solutions are emerging
Cryptocurrencies hold undeniable allure, promising quick wealth and revolutionary potential. Yet beneath the headlines lie risks that can wipe out corporate capital and personal wealth alike. Recent figures show that between 70-90% of retail crypto investors lose money – similar to outcomes in other speculative markets. Much of this stems from extreme volatility, frequent project failures, and investor overconfidence.
Over half of all cryptocurrencies launched since 2021 have disappeared, while nearly half of venture-backed projects or initial coin offerings (ICOs) have also failed. Add the cost of scams, exchange collapses and cyber thefts (over $2.1 billion in the first half of 2025 alone) and the picture becomes clear. These risks are not theoretical. They are all too real.
Businesses are not immune
Individual crypto investors face casino-style odds. Yet roulette has known risks and probabilities; crypto offers none. Prices swing unpredictably, with 90% of new tokens destined to fail. Social media hype fuels Fomo, and behavioral biases deepen losses – chasing trends, ignoring risk management and reacting emotionally during downturns. A market crash can erase gains instantly. And even security isn’t guaranteed: nearly one in five owners has faced withdrawal problems. Wallet thefts remain rampant.
Institutional investors have more tools to manage crypto’s volatility, including diversification, hedging and advanced analytics. But they are not immune to crypto’s risks. Cyberattacks have cost business billions over the past year, and counterparty and operational risks remain dominant concerns.
For CFOs using crypto as part of treasury operations, the dangers include custody failures, governance lapses and market contagion. Stablecoins are marketed as safe yet carry their own risks, such as insufficient reserves or redemption runs that could trigger liquidity crises across banks and markets.
Crypto’s rapid expansion mirrors historic speculative bubbles where excitement outpaced substance, from the tulip mania of the 1600s to the dot-com era. Many tokens have no intrinsic value; when sentiment shifts or regulation tightens, collapses can be swift and devastating. In 2022, the TerraUSD crash erased over $40 billion in days. It is a cautionary example of systemic weakness.
Crypto is also vulnerable to rising interest rates, tightening liquidity, and broader macroeconomic pressures. As safer assets like Treasury bonds yield higher returns, capital often exits speculative markets, driving crypto prices downward. For any business reliant on crypto, that could disrupt plans for growth.
What’s more, stablecoins and crypto markets are increasingly intertwined with traditional finance, creating new vectors of contagion during stress events. Theft, operational errors and unsettled trades still plague the sector, despite investment in compliance and security.
Business leaders would do well to be cautious, avoiding using cryptocurrencies for financing and opting instead for traditional instruments like bonds or equity. If exposure is necessary, I believe holdings should be limited to 1-2% of assets, held with insured, regulated custodians. Likewise, for retail investors, diversification through regulated ETFs or index funds looks smart, keeping crypto allocations modest (under 5%) and avoiding speculative memecoins.
Light at the end of the tunnel
CFOs should consider emerging alternatives. The introduction of central bank digital currencies (CBDCs) – a government-backed digital form of money – will enhance payment efficiency, financial inclusion, and monetary policy effectiveness. Via secure, instant, low-cost, non-intermediated transactions, CBDCs can modernize national payment systems and reduce cash reliance. And the kicker? As CBDCs become established, flight from decentralized crypto is likely.
As the philosopher Nietzsche said, “from chaos comes order.” Beware the perils of today’s anarchic crypto markets.
Joseph DiVanna is managing director of Maris Strategies and a Duke CE educator
