Crypto

Binance CEO Changpeng Zhao Says Bitcoin, Ethereum and Rest of Crypto Should Decouple From Stocks – Here’s Why

Binance CEO Changpeng Zhao says that the limited supply of cryptocurrencies, particularly large-cap assets like Bitcoin (BTC), Ethereum (ETH) and Binance Coin (BNB) could soon break from their correlation with the stock market.

In a new interview on CNBC, Zhao says that unlike fiat, the amount of digital assets that can go into circulation is limited.

“I think like we’re one year in from the previous all-time high. The inflation, the interest rate, the adjustments, etc., those all affect the markets, but those are short-term.

I think longer-term, given how much money was printed over COVID the last couple years, and the amount of quantitative easing that was done, inflation would definitely kick in just by simple logic.

Cryptocurrencies, the big ones – Bitcoin, BNB coin, Ethereum, they’re limited supply, so their supply didn’t increase. The number of people getting into this industry and the utility, the number of people who need to use those coins have increased. The demand has increased, but today, unfortunately.”

Zhao says that he expects a decoupling between crypto and stocks but a correlation in market conditions emerged because people invest in both equities and digital assets.

“In theory, if we go by supply and demand, there’s a very simple logic to derive from that, but today, many people trading cryptocurrencies are also in the stock market so when the stock market tanks, people want to hold cash and they also sell cryptocurrencies. So today, on the short time frame, it’s kind of coupled, but in theory, they should be decoupled.”

Looking at Ethereum’s successful merge to proof-of-stake, Zhao says those in the space should manage their expectations since the anticipated changes will not take effect right away.

“Many people have very high short-term expectations for the merge. They think the Ethereum gas fees will drop from $10 per transaction to $0.02 overnight. That’s most likely not gonna happen. It’s a long process. The Ethereum upgrade takes multiple stages over multiple months or years.”

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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