Changpeng “CZ” Zhao, CEO of Binance, said that a bear market is healthier than a seemingly neverending upward trend, especially in the long run.
Torrid times continue for the crypto market as the Fed hiked interest rates by three-quarters of a percentage point yesterday. This is the third straight hike of this magnitude in 2022, taking the Fed’s benchmark borrowing rate to 3.25 percent, the highest it’s been since before the 2008 financial meltdown. Not only that, but Fed chair Jerome Powell also vowed that policymakers would “keep at” their fight to beat inflation, with rates estimated to reach 4.6 percent in 2023.
The crypto market did not take the news too well, with most tokens within the top 10 list (by market cap) flashing red for the last 24 hours. Bitcoin dropped nearly 6 percent following the announcement, falling from $19,644 to $18,293 early this morning. However, the legacy coin has regained some ground since then, currently trading in the $18,700 range at the time of writing.
Ethereum also took the plunge with a 10 percent nosedive, falling from $1,376 to $1,230 in a matter of hours. However, the second-largest cryptocurrency by market cap has managed to stage some semblance of a fight back, trading at $1,264 at the time of writing. Other coins like Cardano, Solana and Dogecoin also showed similar dips before regaining some of their lost ground.
Such market corrections cause uncertainty and doubt in the minds of crypto investors and traders, who begin to wonder when the bulls will come or if they ever will. However, Changpeng “CZ” Zhao, CEO of Binance, the largest crypto exchange in the world, shared an encouraging outlook at yesterday’s Mainnet conference.
Talking to Ryan Selkis, CEO of Messari, CZ said that a bear market is healthier than a seemingly neverending upward trend, especially in the long run. “Price corrections are actually good,” he said, adding that token prices are not the best indicators of crypto market performance. He explained that the growing number of crypto users and projects is a better indicator of the crypto industry and its future.
According to CZ, the crypto market is still relatively nascent. As such, it has plenty of space to grow, leading to price appreciation in the years to come. “Crypto is so early. We’re not in a saturated market,” CZ said. His advice to investors is to “ride out the winter,” as bigger, better things await the cryptosphere in the future.
CZ’s views seem to be well-founded, with venture capital firms investing $14.2 billion in crypto projects in the first six months of 2022, according to a report by big four accounting firm KPMG. The authors of the report noted that investment figures for H1 of 2022 were more than double that of all years prior to 2021. According to them, this “highlights the growing maturity of the space and the breadth of technologies and solutions attracting investment.”
However, the crypto market is highly volatile, and how things pan out, only time can tell. Until then, it is best to research thoroughly, invest only as much as you can afford to lose, and stay invested for the long run.