Exchange monopolies, Wall Street harvesting, and retail investors' despair
TechFlow Selected TechFlow Selected
Exchange monopolies, Wall Street harvesting, and retail investors' despair
The crypto industry's three-way battle.
Navigating Web3 tides with focused insightsAuthor: Haotian
To be honest, the recent black swan event on 1011 has left me—a normally optimistic industry observer—feeling a hint of despair.
I thought I had it figured out: the crypto industry is currently in a "three-way battle," where big players fight while retail investors grab some scraps. But after this bloodbath and peeling back the underlying logic, it turns out that’s not the case at all.
Frankly, I used to believe that technologists drive innovation, exchanges capture traffic, and Wall Street deploys capital—each playing their own game. Retail investors just needed to time it right: follow tech breakthroughs, ride the hype waves, and charge in when capital flows in. There was always some soup to share.
But after the 1011 massacre, I suddenly realized: maybe these three forces aren’t competing in an orderly fashion—they might instead be teaming up for a final extraction of all liquidity in the market?
The First Force: Exchanges monopolize flow—the vampires holding traffic and liquidity pools.
To be fair, I used to think exchanges simply wanted to grow platforms, expand traffic, scale ecosystems, and profit from selling picks and shovels. But the USDe cross-margin liquidation incident exposed how powerless retail users are under exchange-defined rules. The increased leverage offered in the name of better product experience, along with opaque risk control mechanisms, are actually traps for retail.
Endless referral programs, Alpha and MEME launchpads, circular lending products, high-leverage perpetual contracts—all appear to offer retail more profit opportunities. But once exchanges fail to contain the cascading DeFi liquidations on-chain, retail gets dragged down too. Such is life.
What's truly terrifying: the top 10 exchanges recorded $21.6 trillion in trading volume in Q2, yet overall market liquidity continues to decline. Where did the money go? Beyond fees, a huge chunk vanishes into liquidations. Who exactly is siphoning away the liquidity?
The Second Force: Wall Street capital—entering under the guise of compliance to claim territory.
I was genuinely excited about Wall Street entering the space, believing institutional capital would bring greater stability. After all, institutions are long-term players whose inflows could benefit everyone as crypto integrates with TradFi.
But before this crash, reports emerged of whales making precise short bets and profiting massively—multiple suspicious institutional wallets opened enormous short positions right before the plunge, earning hundreds of millions. These stories keep surfacing, sounding like insider knowledge. At such moments of panic, one can't help but wonder: why do institutions always seem to gain "front-running" advantages before black swan events?
These TradFi players enter under banners of compliance and capital infusion—but what are they really doing? Binding stablecoin blockchains to DeFi ecosystems, controlling capital flows through ETF channels, using financial instruments to gradually seize control over market narratives? They claim to support industry development, but behind the scenes? Let’s not even get into the conspiracy theories about the Trump family cashing in.
The Third Force: Native tech builders + retail developers—the cannon fodder caught in the crossfire.
This, I believe, is where most retail investors, developers, and so-called builders feel true despair. People have said since last year that many altcoins were knocked out, but this time they’ve been completely wiped out—zeroed. It’s impossible not to face reality: liquidity in many altcoins has nearly dried up.
Worse, infrastructure carries massive technical debt, real-world applications fall short of expectations, and developers grind endlessly—only to be ignored by the market.
So I can't see how the altcoin market will ever recover. How can these projects wrest liquidity back from exchanges? How can they possibly compete with Wall Street’s pump power? If the market no longer buys into narratives, and only meme-based gambling remains, then the altcoin space faces a brutal purge and reshuffling—developers flee, industry participants get structurally replaced. Is the entire market destined to collapse into nothingness? Man, it’s tough.
So…
Saying more just brings tears. If this "three-way battle" in crypto continues—with exchanges monopolizing and draining value, Wall Street precisely harvesting gains, and retail tech supporters getting crushed from both sides—it spells total disaster for the traditional cyclical patterns of Crypto.
In the long run, the market will leave only a few short-term winners and a sea of long-term losers.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Haotian | CryptoInsight
