End of 2021 Cryptocurrency investors were frustrated after Bitcoin disappointed and failed to achieve the expected appreciation. The cryptocurrency not only failed to hit the record high of $100,000 expected by many analysts, but it corrected more than 30% from its high of $69,000, ending the year below $47,000.
The Bitcoin price reacted poorly to the expectation of higher US interest rates and a cut in the Federal Reserve’s balance sheet, accompanied by the movement of risky assets – US bonds are already starting to pay more, sucking capital from the stock market and cryptocurrencies. However, Zhao believes that the trillions of dollars the Federal Reserve is pouring into the economy has yet to be absorbed by the markets.
“When you print 30% to 40% more money in a year or two and that money is distributed only to a small number of players and is used to bail out big companies and big banks, that money doesn’t flow into all parts of the economy right away,” said the 44-year-old Chinese Canadian. General: “It usually takes a few years for that to happen.”
Fed stimulus is cited as one of the main drivers of the rally in stocks and cryptocurrencies. Bitcoin may have closed the year with a return of just over 60%, considered low by its standards, but it is up more than 700% since the markets crashed in March 2020.
The entrepreneur has seen cycles like this happen many times. Bitcoin was discovered in 2013 after a friend mentioned the cryptocurrency to poker. Knowing the technology, he became convinced that this would be the future – to the point of selling his apartment to buy everything in BTC.
The decision made him do his best in this world until, in 2017, he founded Binance. In less than five years, the company has become an industry dominance, transferring $18 billion in cryptocurrencies per day, nearly four times as much as runner-up Coinbase. Today, Zhao He amassed a fortune of $96 billion, not counting his cryptocurrencies – he admits that he holds “nearly everything in cryptocurrencies”, but does not disclose the amount.
The CEO is not advising anyone to sell the house to buy bitcoin, but he reiterates that the best thing to do is to buy and hold for as long as possible. “If you have no experience trading outside of cryptocurrency, don’t think that you are the best trader in the world. Just buy it and keep it,” he says.
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Part of CZ’s optimism, as the crypto world is known, comes from the rapid pace of innovation responsible for attracting billions of dollars in investments in 2021 to projects in areas that don’t even exist in 2020, such as pay-to-play games and the metaverse, a trend that has emerged stronger in October and boosted the price of many cryptocurrencies.
Czechoslovakia is betting that 2022 will bring more power to these sectors, which are strongly favored by the greater ease of raising capital with digital assets.
“Financing is much easier using global blockchain whether it is ICOs (Initial Coin Offering), IEOs (Initial Exchange Offer), it is possible to issue coins and therefore most projects are well funded. There is no shortage of money in this world,” he points out. Zhao, noting that he is currently seeing a massive exodus of talent from traditional financial or internet companies into the crypto-asset and blockchain sector.
Given this, he believes that the current price drop should not slow the maturation of the industry. “In the short term, we may see market fluctuations in the price of tokens or coins. But this is normal behavior in market characteristics. I believe innovation will continue and we will see more and more users.”
The greater number of people using cryptocurrencies is directly related to the price of the assets – especially in the case of a rare cryptocurrency like Bitcoin. For CZ, since its supply is limited, the market value of the digital currency must necessarily increase to represent the net worth or value that all these people are trading. So as more people come in and use it, the price tends to go up.
The CEO of Binance does not take the risk of speculating on the price of the cryptocurrency, and defines himself as aversion to expectations. “No one knows what the future will look like, and no one knows what prices will be in the future. This makes the industry more interesting than traditional financial markets,” he notes, noting that, unlike stocks, cryptocurrencies are simultaneously traded in Many countries and all times.
These are the components that, in his opinion, make any projection more difficult. He recommends “Don’t believe anyone’s expectations”.
The full interview is available in the player above.
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