· ·

Binance CEO explains the real reason why the crypto market crashed last week

Binance CEO explains the real reason why the crypto market crashed last week

The crypto market saw one of its largest single-day downwards movement last Thursday, with Bitcoin leading a massive selloff that sent the benchmark digital asset reeling to lows of $3,800, subsequently causing most major altcoins to also crater lower.

This led the aggregated crypto market to erase nearly $100 billion off its market capitalization, which declined from $225 billion to $125 billion during a one-day trading period.

Now, the CEO of one of the world’s largest crypto exchanges is sharing his thoughts on what the real cause behind this recent selloff was, also noting that he still views Bitcoin as a safe haven asset even in spite of its recent coupling with the traditional markets.

Binance CEO equates Bitcoin’s recent decline to a “swimming float attached to the Titanic”

Many analysts and investors were disappointed to see Bitcoin decline alongside the traditional markets, seemingly invalidating its status as a “safe haven” asset.

Changpeng Zhao – the CEO and founder of Binance who often goes by the nickname “CZ” – spoke about the invalidation of this narrative in a recent blog post, explaining that he still views Bitcoin and other cryptos as safe-haven assets, but that the intense turbulence in the global economy was simply too much for the small market to tolerate.

He equates the crypto market’s recent decline to a “swimming float” being attached to the Titanic as it sinks, further going on to claim that eventually, cryptocurrencies will be able to decouple from the traditional market.

“Say you take a swimming float, it works and it will help you float in water. Now let’s say it’s attached to the Titanic as it is sinking. Will that float work get you to the surface now? No, it won’t. Is it because the float no longer works? No, the floating properties of the float still work.”

Here’s the real reason the crypto market crashed in CZ’s eyes

CZ further went on to explain that the recent capitulatory selloff in the crypto market came about due to two primary factors.

Firstly, he notes that the non-die-hard crypto investors likely took the recent turbulence in the traditional markets as a reason to justify exiting their crypto position, creating a torrent of selling pressure that perpetuated as prices declined.

Secondly, he notes that many investors likely turned to sell off their crypto holdings in order to free up capital in order to pay rent and prepare for potential changes in their job situation due to the global instability.

Because all of these investors have already exited the relatively small crypto market, it is a strong possibility that a long-term bottom is in and that traditional investors may begin entering fresh positions in crypto if Bitcoin and other digital assets are able to begin decoupling from the traditional markets.

Bitcoin | BTC

Updated: Mar 22 at 12:31 pm UTC
$6,047.75
-0.85%

Bitcoin, currently ranked #1 by market cap, is down 0.85% over the past 24 hours. BTC has a market cap of $110.56B with a 24 hour volume of $39.7B.

Chart by CryptoCompare

Bitcoin is down 0.85% over the past 24 hours.

Posted In: , , Adoption, Analysis, People, Price Watch

The above advertisement is an referral link.

Invest with AMFEIX

Like what you see? Subscribe to CryptoSlate

Get our daily newsletter containing the top blockchain stories and crypto analysis straight to your inbox.

Sign up to stay informed
Cole Petersen
Author

Cole Petersen

Journalist @ CryptoSlate

Cole is a freelance journalist and university student studying philosophy. He focuses primarily on covering cryptocurrency and blockchain-related news. He owns a non-life-changing sum of Bitcoin and enjoys day trading.

View author profile

Commitment to Transparency: The author of this article is invested and/or has an interest in one or more assets discussed in this post. CryptoSlate does not endorse any project or asset that may be mentioned or linked to in this article. Please take that into consideration when evaluating the content within this article.

Disclaimer: Our writers' opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.