Binance CEO Changpeng Zhao shared a new post and talked about his views on cryptocurrencies. Especially Zhao mentioned about current developments; He answered questions such as “Is Bitcoin a safe port?”, “Why is the price of BTC not rising?”
Safe Harbor Issue
Some see Bitcoin as digital gold, some as currency, and others as investment product. Of course, we do not count those who see Bitcoin as garbage.
The names claiming that Bitcoin is digital gold have been criticized quite strongly lately. Because, while the global markets lost value, the price of Bitcoin started to decrease. This brought people to the question: “How safe can a product fall when the global markets are falling and do not provide any stability to investors?”
Response from CZ
Changpeng Zhao (CZ for short) touched on this in his blog post and said that this question actually does not have a very clear answer. According to Zhao, the question people should ask is not whether Bitcoin is a safe port or not? People should instead focus on the foundation of Bitcoin, the current state of BTC.
Emphasizing that Bitcoin is still solid, Changpeng Zhao says the following about the safe haven issue:
“Let’s say you have a boat. This boat runs smoothly and keeps you on the water. But let’s say that this boat was attached to the sinking ship Titanic. No matter how smoothly this bot runs, can it keep you on the water? No, it can’t. So do you sink because there is a problem with the boat? No, the bot is still running smoothly, but… you see.
Bitcoin and other cryptocurrencies are still basically the same. They still work smoothly. They still have limited supplies, no one can increase this supply by their head. As the (central banks) continue to print fiat money so quickly, you decide for yourself. ”
After making this ‘interesting’ analogy, Zhao stressed that this is a personal question and there is no absolute answer to the question of whether Bitcoin is a safe haven.
Why Bitcoin Dropped?
Changpeng Zhao also talked about the day when the price of Bitcoin fell from $ 7,000 to $ 4,000. Sharing his views on why the bitcoin price has dropped, Zhao said it was actually based on a few different things.
According to Zhao, people must first distinguish between tight cryptocurrencies and novice cryptocurrencies. Zhao outlines these two different types of investors:
“There are people who support cryptocurrencies for their deaths and spend most of their portfolio on cryptocurrencies. These people rarely sell cryptocurrencies and receive nominal money (if they are not going to spend a lot). When the market falls, these people cannot buy crypto money from the bottom because they do not have any nominal money. So these investors (during the fall) do not play a big role.
There are also novice crypto investors. These people may not know much about cryptocurrencies. They sell cryptocurrencies when the level of risk increases or the market is alarmed. ”
According to Zhao, in order to understand the movements in the crypto money market, it is necessary to first understand these different types of investors, in other words, to be aware of investor psychology. According to Zhao, another factor to consider when Bitcoin price starts to drop is:
“Some people can invest on the one hand and meet their basic needs on the other. These people are still able to survive when their investment (stock or cryptocurrency) starts to drop. So they are able to handle a drop in the market. They even buy shares / cryptocurrencies from the bottom of the market.
There are also people who invest in order to pay their rent and need to make money in the short term. These people are selling their cryptocurrencies when the market is down, so that they can meet their basic needs. ”
According to Zhao, there are many factors that trigger / accelerate the decline in the crypto money market, affect / fear people. However, according to Zhao, in order to understand the crypto money market, it is necessary to first understand the different types of investors mentioned above.