It was the weakness of the system and the unwillingness to change any of its aspects that made traditional finance temporarily affect the price of Bitcoin, says Binance CEO Changpeng Zhao (CZ).
The coronavirus pandemic was only the spark that ignited the current global economic collapse, not its cause, says Binance CEO.
In a March 20 blog post, Changpeng Zhao, known as “CZ” in cryptology circles, argued that the coronavirus has shown that the global economy is too weak.
Binance CEO: The economy “should be stronger”
When asked if he felt that conditions this year were different from those of the 2008 global financial crisis (GFC), he said:
“In 2008, there was no pandemic to stop the world economy. But I think the Coronavirus is just a trigger, not the main cause. Our economy should be stronger, at least strong enough to survive some shocks”
Zhao spoke as the price of Bitcoin was becoming more and more dissociated from the misery facing traditional markets. After a historic daily fall last week, which was in line with the stock market indices, this week saw a surprising recovery that at one point was close to 90%.
Since then, the BTC/USD pair has declined, dropping about 7% in the last 24 hours. Unlike the traditional financial system, Bitcoin is not “broke,” says Zhao.
At some point, investors will stop accumulating cash – a practice that has strengthened the dollar during the coronavirus – and instead will start expanding their portfolios again. Among the wealthy recipients will be Bitcoin.
“People have already bought more Bitcoin? No, in most cases. Many of them are still in a panic about toilet paper,” Zhao continued.
“These changes take time to spread in the economy. Changes do not occur immediately when a massive population is involved.”
A “safe haven”?
The comments echo those of Andreas Antonopoulos, the cryptology educator who predicted the impact of a financial crisis on Bitcoin with astounding accuracy several months ago. As reported by Cointelegraph, Antonopoulos said that Bitcoin’s price would initially fall sharply, as investors pulled out of bankrupt stocks, but would then recover.
John Bollinger, the creator of the Bollinger Bands Volatility Indicator, was also supporting this sequence of events, arguing that investors “sell what they can” in such circumstances. However, the intensity of Bitcoin’s fall caught him off guard.
“I didn’t really see it coming, I thought I could act as a safe haven asset,” he tweeted at the time.
For Zhao, however, it was clear that Bitcoin would function as a safe haven in the future, given that its supply is fixed and cannot be manipulated as fiat currency.
“Don’t expect Bitcoin to go up if the Dow Jones index collapses, or vice versa,” he said.
“It is not a product of perfect reverse correlation. If you want that, you should short the Dow Jones index futures”