The crypto market is currently sailing through rough seas – including wave crests and troughs. Lately, however, the market has rather been traversing a sheer endless trough. First Terra plunged into the bottomless pit, shortly followed by Bitcoin – also due to fear of rising inflation. After the market crashed in May, Bitcoin was hit again in mid-June. Central banks had raised key interest rates – the crises at platforms like Coinbase and Celsius, which managed assets worth 20 billion dollars, caused the price to stumble again and briefly drove it below 18,000 dollars.
It will probably be quite a while before the price recovers. One reason for this is that key interest rate hikes are now making fixed-interest securities interesting for investors again. The fat years and fast money seem to be over – people are content with lower but safer yields. Whether this nervous investment behaviour will pay off remains to be seen. Binance CEO Changpeng Zhao, at any rate, believes that the crypto crash is a normal market fluctuation. He sees similar behaviour in the stock market, which has been rising and falling cyclically for decades.
The crypto market has had a tough few weeks. The biggest trading platforms are feeling it too: Coinbase plans to lay off just under 20 percent of its workforce, according to an announcement by CEO Brian Armstrong. That’s 1,000 employees laid off for fear of a recession. In a time of a growing labour market, a short-sighted decision that benefits Binance: CEO Changpeng Zhao announced plans to hire 2,000 new employees. He also did not spare a side blow to Coinbase: hiring additional employees was possible because the company did without expensive Super Bowl commercials and sponsorship contracts.
In an interview with Bloomberg, he also clarified his assessment that there was no reason for concern. Rather, the current crash is “normal market fluctuations”, which are normal. “Markets go up and down. We see that in the stock markets as well. Netflix has also fallen by 70 per cent. It’s just part of normal market behaviour,” Zhao said.
Now more than ever!
In fact, Zhao sees the current market situation as the best time to hire new staff. Now is also the time for takeover deals, he said. Competing trading platforms, information websites or providers of crypto wallets can be bought cheaply now. Here, the wisdom that everything repeats itself and that one should learn from the past comes true again: What is meant, however, is not the polemical comparison of cryptocurrencies with Dutch tulip bulbs, but the principles of responsible economic management with consideration for coming market challenges.
This is exactly the situation we find ourselves in: the quick, easy money is no longer so easy to make – the starting position is now more difficult, but not hopeless. Those who did not put on fat during the fat years will now starve. This principle has always applied in nature and is also valid on the crypto market. Now one should do one’s best to hodl or even buy up if the funds allow it. Those who survive this crisis emerge stronger. Has always been the case.