In light of "unpredictableness," Binance CEO advises cryptocurrency purchasers to "hold"

    TheMorningCrypto Desk
    TheMorningCrypto Desk
    Published on November 15, 2022 7:12 PM

    Updated on January 9, 2023 12:51 PM

    "We will see a time of tremendous volatility and unpredictability since the cryptocurrency industry is so difficult to anticipate," warns Binance CEO during an interactive live Twitter session.
    In light of "unpredictableness," Binance CEO advises cryptocurrency purchasers to "hold"
    Source: StartUp Talky

    Changpeng Zhao (CZ), CEO of Binance, has sharply cautioned amateur and cash-strapped traders against trading cryptocurrencies in the face of significant market volatility and unpredictability. Furthermore, he advised inexperienced investors to wait out a difficult time rather than risk money that they required for everyday necessities.

    You may hear the recording for the interactive CZ-led Ask Me Anything session sponsored by Binance on its official twitter account by clicking the below-tagged tweet.

    In general, CZ advised against investing in cryptocurrencies with funds that you would need within the next week or month; instead, you should only do so with discretionary funds that you won't need for a number of years, at most.

    The FTX problem has had a severe impact on the whole ecosystem, notably a number of centralised exchanges that have had to temporarily suspend withdrawals, which has contributed to the increase in market volatility. Zhao, though, reaffirmed that Binance is free of any such problems. He cited the company's balance sheet in response to the question of why consumers need to keep their faith in the exchange:

    “We don’t have loans. We don’t have debt. We don’t owe anybody any money. We also did not give loans out of the platform. So we never take user assets and give it to a third party to manage and try to make yields,” he stated.

    We can see how Binance mocked the FTX collapse in this instance. Binance had previously planned to buy FTX; the deal followed a months-long spat on social media between Binance CEO Changpeng Zhao and FTX founder Sam Bankman-Fried.

    However, Binance has now revoked its letter of intent to acquire FTX.  After doing corporate due diligence, Binance made the decision not to pursue the prospective purchase of in light of recent press reports about improper handling of client funds and claimed investigations by U.S. agencies.

    Zhao said that withdrawals from Binance happened as a result of the FTX collapse and other incidents that eroded public support for centralised exchanges. He emphasized that even if Binance failed, the platform would still permit consumers to withdraw their money. “If everybody withdraws their funds from the centralized exchange, we’ll just shut down the centralized exchange. We have many other profitable businesses that we have,” he added.

    The possibility of such a development is not lost on Zhao, who asserts that centralised exchanges may not even be required once decentralised finance (DeFi) applications are adopted by the general public: "If we can have a way to allow people to hold their own assets in their own custody securely and easily, that 99% of the general population can do it, centralised exchanges will not exist or probably do not need to exist, which is great."

    Although Zhao noted that the company's investment partners include both centralised exchanges and decentralised protocols to provide customers a choice and help entrepreneurs in their endeavours, the Binance exchange itself is centralised. “We’re technology agnostic. We’re not trying to centralize everything. We’re not trying to bring everybody onto the centralized exchange. If you’re good enough to use a decentralized exchange, go for it," Zhao said further. 

    As his farewell speech to the live session, he said, "So unless you're very experienced, very mature, very confident, and can handle the risk, I would recommend most people just hold for this period of time." Not to add, he emphasised the most crucial advice in the realm of crypto market: if you don't understand what is happening, don't try to predict what will happen. Absolutely nothing can be predicted. As a result, we will experience a time of extreme instability and unpredictability.