Binance CEO urges buyers to 'hang because of market 'unpredictability'

Binance CEO Changpeng Zhao said that people should invest in cryptocurrency if they use only free funds, as the market is experiencing high volatility amid the effects of FTX.

Changpeng Zhao ("CZ") advised inexperienced investors with limited funds to stay away from trading cryptocurrencies in an environment of extreme market volatility and unpredictability.

On November 14, in an Ask Me Anything tweet hosted by Binance, the CEO suggested that inexperienced investors wait out the turbulent period instead of risking the money they need to live.

“You should not invest in cryptocurrencies if you are using the money you need for next week or next month, you should only use discretionary cash that you won’t need for a long time, like maybe a couple of years.”

For those with free funds, Zhao advised inexperienced investors and traders to think twice before investing in the market in the near future:

“If you don't know what's going on, don't try to guess what's going to happen. This is very difficult to predict. Therefore, we will go through a period of high volatility and unpredictability.”

“So if you are not very experienced, not very confident, and cannot handle the risk, I would recommend that most people better wait out this period,” he added.

The wave of volatility in the market came after the FTX crisis negatively affected the entire industry - especially a number of centralized exchanges, which were forced to temporarily stop withdrawing funds.

But Zhao confirmed that Binance does not have such problems. Asked why users should maintain trust in the exchange, he pointed to the company's balance sheet:

“We don't have loans. We don't have debts. We don't owe anyone money. We also did not give loans outside the platform. This way, we never take user assets and give them to a third party to manage and try to generate income.”

Zhao confirmed that Binance was facing withdrawals following the FTX crash and several other events that led to a drop in community confidence in centralized exchanges.

He reiterated that even if Binance crashed, the platform would still not block its users from withdrawing funds.

If everyone withdraws their funds from the centralized exchange, we will simply close the centralized exchange. We have many other profitable businesses that we have,” he said.

Zhao believes such an event is also entirely possible, saying that once decentralized finance (DeFi) applications become mainstream, centralized exchanges may no longer be needed.

“If we can allow people to safely and freely store their own assets at their own disposal, and 99% of the population can do this, centralized exchanges will not exist or probably will not need to exist, which is a very good thing.”

While the Binance exchange itself is centralized, Zhao emphasized that the company’s investment partners include both centralized exchanges and decentralized protocols to provide users with choices and support entrepreneurs in creating.

“We are technologically agnostic. We are not trying to centralize everything. We are not trying to bring everyone to a centralized exchange. If you know enough to use a decentralized exchange, use it.”