Changpeng Zhao (CZ) Interview with Bankless: Market at an Interesting Turning Point, Beginning of Bull Market, CZ Shares Painful Experience of Publicly Trading Coins

Zhao Changpeng was interviewed by Bankless again after a year. They discussed the FUD facing Binance, catalysts for the next bull market, regulatory complexities of buying a bank, and CZ's advice on users' coin speculation losses.

Does CZ's Pinned Tweet Work?

Bankless first asked about CZ's pinned tweet in 2023, where CZ claimed to simplify things this year and spend more time on a few things, such as:

1. Education
2. Compliance
3. Developing products and services
4. Ignoring FUD, fake news, malicious attacks, etc.

The fourth point has also become a common gesture used by CZ, even spawning memes on Twitter. So, has CZ really kept it simple this year?

CZ's response that "not really" made the three present laugh. He mentioned that he still faces a constant stream of FUD and has to emphasize "4" on Twitter every day.

Fortunately, some community members also leave comments with "4" under certain news, which he believes has had a good effect, allowing him more time for the first three points mentioned above.

CZ: Tether is the Largest Crypto Enterprise

Bankless asked why Binance and Tether are like FUD vacuum cleaners, constantly spreading negative news.

CZ attributed this to three reasons:

1. Both Tether and Binance are large in scale, with Tether possibly being the largest crypto enterprise currently. Who would want to read news about a small exchange?

2. Instead of what Binance is building for the crypto sector, people prefer negative news.

3. Because CZ looks Chinese.

What is the Next Bull Market Catalyst?

In response to this question, CZ listed the bullish market momentum of recent years, including the post-halving surge in 2013, the ICO boom in 2017, DeFi and NFTs in 2021. He admitted he doesn't know what the next catalyst will be and speculated that DeFi and NFTs will continue to develop practical applications. However, the rise of meme coins in recent times has left him baffled.

He believes that the unpredictability of bull market catalysts, combined with users actively seeking the holy grail of investments, has led to a frenzy around meme coins. Nevertheless, he emphasized that meme coins are not the next driver of a bull market. CZ emphasized:

I believe the market is at an interesting turning point. This is not financial advice, I might be completely wrong. I hope we have passed the bottom of the bear market and are at the beginning of a bull market; this is just a feeling I have.

Community Questions for CZ

I. Binance's Ethereum Staking Service Only Uses 10% Unshielded Relays. Can This Be Increased to 100%?

This question came from Ethereum core developer Justin Drake. Bankless joked that this seemed more like a demand than a question.

Justin Drake pointed out that using unshielded relays could increase staking rewards for users. He roughly estimated that Binance loses at least $2 million in staking rewards per month.

CZ responded:

It took me a while to understand. I thought you were talking about relays on the BNB Chain, and I don't even know what that is because I have no knowledge of the technical details of the BNB Chain. Basically, Binance helps users stake ETH on a node. We don't like to spread out to too many nodes, and we haven't done well in this regard. I will have the team look into this.

II. KOL Degen Spartan: Can We Buy a Bank to Be More Crypto-Friendly?

CZ pointed out that Binance did consider this but the complexities involved are far beyond what meets the eye. Ultimately, it would require negotiations with numerous regulatory bodies:

You buy a bank, and it can only operate in one country. You also need to negotiate with the regulatory bodies of that country extensively. Buying a bank doesn't mean you can do whatever you want. If regulatory bodies still don't allow crypto-related businesses, the bank license will eventually be revoked, not to mention the complexity of promoting crypto business internationally.

CZ also emphasized that following everyone's logic, buying banks in various countries could promote crypto adoption. However, besides regulatory issues, banks are not cheap, and they are not the money-printing machines people imagine; they have low profits and few businesses.

He summarized the reasons for not buying a bank:

Banks don't have a good business model, they carry high risks. They use users' money for trading and lending to try to make profits, and if they fail, they declare bankruptcy. Many governments step in to rescue, but carrying debts is not a business model I like. I prefer enterprises with zero debt.

However, CZ still mentioned that Binance will invest in some banks in the future, hoping to influence them to be more crypto-friendly.

CZ's Bear Market Coin Trading Advice

I. Reduce Positions, Then Reduce Again

For users feeling stressed and frustrated by losses, CZ suggests halving, reducing by a third, or a fifth of their positions. He emphasized the importance of the proportion of investments. If emotions still fluctuate regarding investment performance, reduce again until you see an opportunity to invest the money profitably, but hitting zero doesn't matter.

CZ said:

This is the correct position size, the most important investment principle. Don't listen to anyone on Twitter saying it will rise or fall; these people won't tell you what percentage of their assets they invested. He also emphasized the importance of risk diversification, although CZ seemed to have completely forgotten that he rose by going all in on Bitcoin.

II. Trade Less, Hold Long-Term

CZ finally mentioned his painful experiences trying to trade stocks while working at Bloomberg:

It's like every stock I buy falls, and everything I sell rises, it's really tough. I also tried trading cryptocurrencies in 2013 and thought, okay, just buy and hold long-term. Over 90% of people are not cut out to be traders, and that's okay. Trading requires very specific skills.