Speaking at the BlockDown 2020 conference, the chief executive and founder of leading cryptocurrency exchange Binance, Changpeng Zhao (CZ), shared his outlook for crypto assets amid the current global climate of economic uncertainty.
BlockDown 2020 is a two-day conference being held from April 16 to 17. The event is being held virtually in response to the coronavirus pandemic.
Crypto exchanges going strong despite price volatility
While CZ acknowledged that 2020 has “been rocky in terms of the whole global environment,” he contended that the crypto exchange business “is actually doing quite well.”
“Even though the bitcoin price dropped, we are seeing a lot more trading activity,” he said, emphasizing that volume has increased by between 3 times and 5 times across major exchanges.
Crypto markets caught off-guard by liquidity crisis
Changpeng Zhao speculates that most crypto investors, himself included, did not anticipate the impact that an aggressive pull-back in the mainstream markets would have on the cryptocurrency markets.
“Everyone thought the Bitcoin price will go up when there's an economic crisis. But basically what happened is that when [the mainstream] market tanked by 5% there was a lot of money disappearing from people's hands.”
CZ asserts that a rush of traders all trying to simultaneously sell crypto into fiat accelerated the market crash.
Record trade volume bullish despite crash
The Binance executive notes that historically, “whenever price drops and stabilizes at a lower price, the trading volumes are lower [...] whereas, in this drop, we actually see much higher trading volumes.”
CZ infers the surge in trade “means there’s a lot more people coming into the industry,” noting the recent increase in trade activity.”
“Usually when that happens, the prices don’t stay low for too long,” he adds.
Will quantitative easing spark the next bull trend?
While CZ expects that quantitative easing measures will ultimately drive greater crypto adoption, he asserts that many market participants hold overly bullish expectations for how the U.S. stimulus package will impact the crypto markets in the short term.
“I think that basically everyone's kind of expecting things to happen immediately on a daily basis. So the minute that the feds print money, the Bitcoin prices go up because people should be using those money to buy crypto. But no one has gotten that money yet, and they're still trying to figure out how to distribute their money.”
“I think in a few months or so, we probably will see quite a lot of that sort of logic play out,” he states.
“Mathematics works. If you increase supply of the fiat currency and bitcoin is a limited asset, mathematics will eventually work. So I think we'll see impacts in a few months.”