It is no longer news that the cryptocurrency market has been experiencing a significant downward trend, with the total market valuation falling below $1 trillion.
The recent cryptocurrency crash reminded many of the 2018 bear market, which began moments after the prices of existing digital currencies reached new highs.
CZ: The Current Cryptocurrency Market Has More Leverage
Interestingly, Changpeng “CZ” Zhao, the CEO and founder of Binance, the world’s largest cryptocurrency exchange by 24-hour trade volume, has highlighted key differences between the 2018 and current bear markets.
According to CZ, cryptocurrency now has greater leverage than it did in 2018. CZ defined leverage as fast and slow, stating that slow leverage is found when funds lend to various decentralized finance (DeFi) protocols. In contrast, fast leverage is mostly found on centralized exchanges, particularly futures products.
CZ stated that slow leverage is being removed from the system, which is one of the main reasons the entire crypto market is experiencing a domino effect.
“When one of these gets (Funds) liquidated, the affected lenders typically take a few days or weeks to realize or admit the pain. These can also have a cascading effect, but the propagation speed is much slower,” CZ said in a statement.
As a result of the ongoing cascading effect, CZ stated that some crypto-related projects are usually fortunate in that they receive funding from “big fish,” whereas others do not.
Allowing Bad Cryptocurrency Projects to Fail – CZ
He mentioned that some projects are bad and should not be saved. “Don’t perpetuate bad companies,” CZ says. Allow them to fail. Allow better projects to take their place, which they will.”
Unfortunately, these projects have attracted many users by offering enticing promotions such as inflated incentives and creative marketing. While CZ claimed that the crypto market hasn’t seen “the end of these yet,”
“Sadly, some of these ‘bad’ projects have a large number of users, often acquired through inflated incentives, ‘creative’ marketing, or pure Ponzi schemes. Bailouts here don’t make sense. Let them fail. Let other better projects take their place, and they will.”
The Binance executive stated that these bad projects do not require “bailouts” but that cryptocurrency projects with good qualities and a few mistakes should be saved.
“With our position as one of the largest industry players with healthy cash reserves, we have a duty to protect users. We also have a responsibility to help industry players survive and hopefully thrive But: Not all bailouts are the same.”
Related article: Binance.US Eliminates Btc Trading Fees as Competitors Feel the Heat
Mike McGlone and CZ’s Take On Bitcoin Price
According to CZ, the current market value of Bitcoin is low but not entirely bad.
“In 2017, we thought $20,000 was ridiculously high. Today, we consider 20,000 to be excruciatingly low. “The industry is expanding.”
Meanwhile, CZ’s views on the crypto market’s massive growth were echoed by Bloomberg’s senior analyst Mike McGlone, who stated that Bitcoin, at $20,000, is now the new $5,000.
“Bitcoin $20,000” Perhaps $5,000 is the new $5,000 – “The fundamental case of early days for global Bitcoin adoption vs diminishing supply may prevail as the price approaches too-cold levels typically,” McGlone said in a recent tweet.
Bitcoin is currently trading in the $20,000 range as investors continue to hope that the ongoing cryptocurrency winter will soon end.