Stop dreaming, even if Binance dies, the industry won't get any better

Original｜Odaily（@OdailyChina）

Author｜Wenser（@wenser 2010）

As BTC prices continue to weaken, the crypto market has once again reached a critical point concerning confidence and liquidity. Simultaneously, a storm of public opinion, almost carrying a "sense of liquidation," is rapidly spreading within the industry, with its spearhead squarely aimed at Binance.

From "Only when Binance falls can the market improve" to "The essence of the October 11th crash is Binance's problem," it seems that as long as Binance is identified as the 'culprit,' all the industry's dilemmas have an answer.

But is the issue really that simple? Let's conduct an extreme thought experiment—If one day, Binance really collapses, will the crypto industry truly become better?

The answer, stated upfront, is of course not.

The Death of the Industry's Largest Exchange: Either from Asset Theft or Regulatory Hammer

No matter how much imagination one employs, it is almost impossible for Binance to die due to its own poor management or industry competition in the coming years. Judging from profitability, cash flow scale, or the self-sustaining capability of its business lines, Binance has long been positioned within the most solid structure of the crypto industry, one of the few platforms that has truly weathered bull and bear cycles.

So, if we must speculate on potential scenarios for Binance's collapse, I believe there are only two possibilities:

One is a scenario where Binance's massive reserve assets cannot be redeemed due to theft or unexpected impacts. After all, the collapses of FTX and the thefts from Bybit are not distant memories. Risks such as North Korean hackers, social engineering attacks, and sudden black swan events persist, making such a situation not entirely impossible.

The other possibility relates to the regulatory power of sovereign nations like the United States government. Especially considering the approaching U.S. midterm elections and recent events like the "ICE shooting incident" and "healthcare reform bill controversies," Democratic forces may regain the initiative in U.S. regulatory agencies. At that time, Binance might also face a series of challenges and heavy regulatory blows.

Based on these possibilities, let's boldly hypothesize about the various subsequent scenarios following Binance's potential collapse.

After Binance Falls, No One is Spared: Users, Assets, and Industry Confidence Suffer Devastating Blows

If Binance collapses due to asset damage or a regulatory hammer, a storm of severe volatility will undoubtedly sweep across the entire crypto market.

Consequence One: Users Become Creditors, Suffering Massive Asset Losses

According to data from Binance's official website, Binance currently has approximately 307 million global users. This means that currently, roughly 1 in every 27 people globally holds crypto assets. Considering the estimated total crypto industry user base of around 600-650 million people in 2025, it is no exaggeration to say that Binance's user count accounts for nearly "half" of the total number of participants in the cryptocurrency industry.

If Binance were to suddenly collapse, its users would be the ones most devastated. Regardless of the "cause of death," this would mean that, much like the FTX creditors still struggling for compensation today, Binance users would also become "Binance creditors."

For the countless individuals who have entrusted their life savings to Binance, this would undoubtedly be the most difficult outcome to accept.

Consequence Two: Asset Theft or Passive Destruction, The Market Faces a Forking Moment

After Binance's collapse, the market will also face a forking moment depending on the different flows of its assets.

If Binance's massive assets are lost due to a hack, considering that hackers would quickly liquidate various mainstream coins including BTC, the crypto market would face large-scale sell-offs. To avoid the continuous price decline of their held tokens, many industry participants would likely choose to sell as soon as possible to minimize losses. At that point, the crypto market might experience a decline far more exaggerated than after the FTX collapse in 2022.

Another possibility is that Binance's reserve assets become difficult to withdraw due to unexpected circumstances, equivalent to being passively locked or destroyed. BTC and ETH might instead experience a surge. After all, according to Coinglass data, Binance exchange wallets hold approximately 650,000 BTC, accounting for about 3% of BTC's total supply. The total assets within the Binance exchange amount to as high as $142.27 billion.

Of course, a more severe consequence of Binance's sudden collapse would be the indiscriminate blow to crypto institutions. Whether it's crypto VCs and other investment institutions storing massive assets on Binance, or market makers acting as liquidity bridges, once Binance falls, they would face the awkward situation of frozen or irretrievable assets. The massive institutional assets involved would affect liquidity pipelines across different links and chains within the industry.

The final result could very likely lead to a series of chain liquidations, potentially lasting 2-3 years, or even longer.

Consequence Three: Industry Confidence Dries Up, Ushering in Strong Regulatory Entry

Following Binance's collapse, the overall confidence in the crypto industry would also suffer a devastating blow.

After all, as the saying goes, "Confidence is more important than gold." As an emerging industry with a history of less than 20 years, the collapse of a leading cryptocurrency exchange would greatly shake the confidence of industry participants within the circle, as well as traditional financial market practitioners and onlookers outside the circle who were originally interested in crypto investment.

What follows would inevitably be the forceful entry of regulatory power. On one hand, BTC strategic reserve plans would undoubtedly be shelved indefinitely by sovereign nations like the U.S. government. On the other hand, regulatory compliance measures such as mandatory KYC and proof of reserves would become stricter.

The final result is that the simplistic slogan "When the whale falls, all things flourish" you might shout cannot be realized: Binance's collapse does not mean its original users and new crypto users will gradually disperse to other CEXs. Instead, it could lead to small and medium-sized exchanges dying in succession due to compliance costs and a sharp drop in user volume, ultimately becoming unsustainable. At that point, the scale of the cryptocurrency industry is bound to shrink further.

"If Binance Dies": An Emotional Outlet of "Blaming"

Returning to the initial proposition—After Binance collapses, will the crypto world become better? Of course not.

Binance's journey to becoming the de facto largest exchange in the industry is the result of long-term博弈 and the collective choice of the industry and its users, not a stroke of偶然幸运 in a single cycle.

Whether in terms of depth, liquidity, system stability, or business self-sustainability, Binance's position is the inevitable outcome of accumulated advantages over many years. It was pushed to this position through countless real transactions, real capital flows, and real user migrations.

However, when the industry as a whole enters a stage of narrative exhaustion, stagnant incremental capital, and structural liquidity失灵, the real problems begin to surface. What cannot be quickly resolved are the industry's own supply mechanisms and trading structures. The easiest target to bear the brunt of emotional宣泄 and become the "scapegoat" is naturally the "leader" at the forefront.

The current voices that恨不得 "first bring Binance down and then talk" are, in essence, not answers to the problems. They are a highly emotional form of "blame-shifting explanation" born out of powerlessness to change the industry's structural困境.

But the reality is, even if Binance suddenly disappeared at this moment, the crypto world would most likely not become healthier because of it. It would most likely only become more fragile, more chaotic, and more difficult to rebuild confidence.

Of course, heavy is the head that wears the crown. Standing at the center of the industry inherently means having to simultaneously承受 the光环 and the指责, helping the industry find a way out. This is the宿命 role Binance cannot avoid.

In the movie "The Smiling, Proud Wanderer," Ren Woxing said to Linghu Chong before dying: "You think killing me will bring peace to the江湖? Dongfang Bubai is ten times more ruthless than I am."

In the crypto江湖, we are all, to some extent,身不由己.

And what truly deserves反复追问 is never "who should be pulled down from the神坛," but rather, after the old narratives失效, what can this industry still rely on to move forward.