The Coronavirus pandemic was all around the world like fire. And this is what that ignited the current global economic meltdown, not its cause, the Binance’s CEO says.
As per the blog post published on March 20, Changpeng Zhao, famous as “CZ” in crypto-verse, argued that coronavirus shows the world how weak our economy is.
Binance CEO, CZ: The Economy “Should be Stronger”
When asked whether he felt conditions this financial year was anyway different from the global financial crisis (GFC) occurred in 2008, he told:
In 2008, there wasn’t a pandemic pausing global economy. But I believe the Coronavirus is just a trigger, not the root cause. Our economy should be stronger, at least strong enough to survive some shocks.
Zhao makes that point witnessing Bitcoin’s increasingly decoupling from the misery facing traditional markets. After a historic daily fall last week in line with stocks indexes, this week saw a startling recovery which at one point neared 90%.
Since then, BTC/USD has somewhat cooled and trading down around 7%. However, Bitcoin price is not broken unlike the legacy system, says Zhao.
At some point, investors will stop hoarding cash. It’s a practice that strengthens the dollar during the pandemic and instead, begins broadening their portfolios again. Bitcoin will be the next wealth destination among others.
“Have people bought more bitcoin yet? No, in most cases. Many of them are still panicking over toilet paper,” Zhao continued.
These changes take time to propagate in the economy. Changes don’t happen immediately when a mass population is involved.
A “safe haven” for bitcoin price?
CZ’s comments give support to the statement made by Andreas Antonopoulos who is the cryptocurrency educator. Andreas Antonopoulos predicted the impact of a financial crisis on Bitcoin price with uncanny accuracy several months ago. As per the earlier media report, Antonopoulos said that Bitcoin would initially fall hard, as investors exited crashing stocks, but then recover.
Also favoring that sequence of events was John Bollinger, the creator of the Bollinger Bands volatility indicator, who argued that investors “sell what they can” under such circumstances. The intensity of Bitcoin’s fall, however, caught him off-guard.
“Truly didn’t see that coming, I thought it might act as a safe haven asset,” he tweeted at the time.
For Zhao, however, it was clear that Bitcoin will function as a safe haven in the future, given that its supply is fixed and can’t be manipulated like fiat currency.
“Don’t expect bitcoin to be guaranteed to go up when the Dow Jones index crashes, or vice versa,” he said.
It’s not a perfect invesrse correlation product. If you want that, you should just short the Dow Jones Index future.