Binance CEO: “They’re buying like crazy right now”
Who's buying crypto right now, who's selling, and why?
There's been a lot of selling going on in the cryptocurrency markets, and every other market, lately.
But in crypto it's mostly been the people who just got into the space in the last half a year or so, suggests Binance CEO Changpeng "CZ" Zhao in an interview with Finder.
At least that's what he's seeing.
"The guys who registered [with Binance] in the last 6 months or so are selling much more aggressively than people who registered more than 6 months ago," he said.
"Binance has data for about two and a half years - the guys who registered in the first two years of [its] existence, they’re buying like crazy right now."
"The newcomers are selling a lot more."
It could be a question of confidence in the industry's value proposition, and how deeply someone feels they understand the space, CZ adds.
"The guys who are not deeply into cryptocurrency, those guys don't have the level of confidence, they don't have the deep understanding of cryptocurrencies... I think that's a dynamic we saw."
The value of a bit
With the global markets in turmoil, that value proposition is more apparent than ever.
"When we look at whats happening now, there's a lot of people to blame for this financial crisis," CZ says. "Some people blame the coronavirus, but I think the virus is just a trigger."
"Some people blame it on the mismanaged financial system, some people blame the fed, some people blame the CEOs, but I think the whole system is kind of not working anymore."
Cryptocurrency presents a potential solution to these systemic problems, CZ says.
"I think cryptocurrency brings a new level of system, that's like a new playing field. It's much more fair, much more decentralised, it solves a lot of the fundamental problems we have int he old industries... which we call the current system today."
Unbanking the banked
For an example of what this looks like in real life, consider what a big difference it is to have an alternative to the traditional banking system.
69% of the world's population is now banked. While this is undoubtedly a mostly good thing for financial inclusion, it also means most of the world's population is inadvertently funding many of the problems that caused this crisis.
By lending your money to the bank, you may inadvertently be doing your part in letting your money pump up a wild, speculative corporate debt bubble, and funding the financial antics of companies that are better cut off.
For many large banks, household deposits are their bread and butter, making up most of their holdings. These are the same depositors that get hurt when everything blows up.
Part of the reason things can spiral so far out of control is because most people still have little choice in whether or not they keep their money in a bank.
By presenting a disintermediated alternative to the banking system, and giving people an alternative option, they have more power to vote with their wallets by holding some (or in CZ's case, all) of their money outside the banking system.
"Basically we have the fed printing a lot of money, giving it to the banks, bailing out the large companies who are deemed too large to fail. Those are inefficient companies we’re using taxpayer money to support," CZ said.
"We’re kind of deviating away from the capitalism mentality, where if you're not providing a valuable service you should be allowed to fail."
"Then on top of that then we have CEOs who take do everything to do buybacks, to push the stock price up and then cash out," CZ says.
"The VC boardroom cash out, the institutional investors cash out, then the retail investors are left holding the bag. The CEOs take a big cheque out when they quit."
"There's a lot of those problems inherent in the old system," CZ says.
"A true free economy actually solves a lot of these problems."
"We prevent a problem right now, but the problem just becomes bigger later, up to a point where we can't prevent it anymore and everything crashes."
I think Bitcoin solves a lot of those problems," CZ says, "this is why I'm still very long Bitcoin."
"And I think cryptocurrency is still totally fine. It's not gonna disappear, in fact it's going to grow bigger and stronger over time."
"The decisions, whether you choose to buy stock or buy crypto or hold fiat or hold any gold, all of those decisions will have an impact," CZ adds.
Disclosure: The author holds BNB, BTC at the time of writing.
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