CZ believes the “journey has just started” for BTC, DeFi, and cryptocurrency.
Changpeng “CZ” Zha, founder and CEO of Binance, frequently tops the list of top people in crypto and blockchain. As the founder of what became the largest exchange in the world in 180 days, said to command 25% of the market share in transactions, with just under $500 million in trading volume as of early 2019, CZ has a perspective that few can claim.
CZ is clearly bullish on Bitcoin and at the head of the charge on crypto with Binance, OKCoin, and his DeFi projects. It seems to CZ, the meteoric run on Bitcoin, and even the subsequent dips, were to be expected.
We interviewed CZ as part of a report on Bitcoin outlook for 2021 and would like to share his responses in total (with some editing for length) here. These responses are from January 15th, so do not refer to any subsequent actions in the crypto market.
Where do you see BTC going in 2021?
The industry’s development of 2020 has formed a new foundation for further growth. The slew of institutional investors making public their acquisitions, combined with the DeFi boom over last summer, raised public awareness and helped BTC break new records this early in the year.
The macroeconomic conditions we saw last year, partly compounded by the pandemic, will continue to pressure more institutional investors to pursue ways to hedge against inflation. Whether it is for trading or treasury management, institutional investors will consider BTC inevitably, so we think a steady upward trend for the rest of the year would be justified.
“Altcoin Season” — has this happened but not as dramatically? Do you expect it to happen for ETH or anyone else?
Right after its third-halving in May last year, BTC had very little movement, and subsequently, the market started showing interest in altcoins the following month. By July, Ethereum saw 45% month-on-month growth, leading other altcoins and possibly helped propel BTC as well. So we already had an altcoin season last year, and there are prior similar cycles in hindsight, but they are perhaps less dramatic in terms of the volume and value we have now.
Ethereum’s momentum last summer can also be attributed to the boom in DeFi, which is an important part of our ecosystem, so that is something the industry continues to work on. Currently, BTC looks to hold its market-leading position, as it is being lifted by new institutional entrants. Where Ethereum and potentially other altcoins including BNB could lead is by providing DeFi solutions and other yet to be realized applications besides storage of value.
Are BTC HODLers getting carried away? Or is all the hype justified?
Around this time last year, BTC was priced at ~$8,800. About five years ago, BTC was valued at ~$400. So if we put ourselves in the shoes of someone who had HODL early, and how early is, of course, a matter of relativity, their excitement is understandable.
Many in the industry also recognize the entry of institutional players as a validation of BTC. Institutional investors can broadly be categorized as active traders, who have no directional bias, or treasuries who intend to allocate a portion of their funds for hedging against inflation. We wouldn’t expect most corporate entities to be too public about their treasury acquisitions, apart from the necessary declaration they have to make, but that allocation of BTC in treasury is somewhat a form of institutional HODL too.
What are people NOT paying enough attention to — there are so many factors, it seems you have to account for the global economy, buyer sentiment, regulation which is hard to predict, etc.?
Like other industries and business sectors, we indeed have to account for a multitude of factors. Because cryptocurrency and blockchain technology moves so fast, our industry is also developing the market and creating the tools as we grow. We are creating worldwide access to digital currency and making that experience enjoyable for as many people as possible without compromising on security. There’s no precedent in what we do, so all the more we have to account for various factors.
As users of new technology, we get accustomed quickly and naturally start to demand more. On the one hand, that is good as user feedback drives us to finetune the features we can provide and what are the areas we need to work on. On the other hand, we have to remember that this industry is very young. Bitcoin is barely over a decade old, Ethereum launched about six years, and Binance is over three years old.
The journey is just still getting started and one thing that we would highlight is DeFi. The industry is working together to explore ways to decentralize finance and that requires a new way of looking at how we save, spend, and access money. At Binance, besides continuously upgrading our exchange platform, we are building a full suite of DeFi tools to educate and enable users to experience participation in creating and accessing liquidity, notably our Binance Smart Chain that is designed for high performing decentralized applications. Right now BTC in itself is not as DeFi-enabled as Ethereum or Binance Smart Chain are, because BTC wasn’t originally built for those applications. Nonetheless, the BTC rally brings a positive effect into the whole market, and as we have seen, advancements in DeFi also spillovers into BTC.