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Covid-19 ‘net positive’ for cryptocurrencies but performance still correlates with stock market, Binance founder says

  • Binance, the world’s biggest cryptocurrency exchange by trading volume, saw a 47.4 per cent rise in new institutional investors in the first quarter
  • Stress on traditional financial markets has pushed some investors into cryptocurrencies, founder ‘CZ’ Zhao Changpeng says

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Binance founder and chief executive "CZ" Zhao Changpeng. Photo: Handout
Tracy Qu
If financial markets were boats, the stock market would be as big as the Titanic while cryptocurrency exchanges might be like sailboats in comparison, according to billionaire “CZ” Zhao Changpeng.

“The market cap for crypto markets is probably 1,000 times smaller than the stock market,” said the 43-year-old founder and chief executive of Binance, the world’s biggest cryptocurrency exchange by trading volume. If a ship as large as the Titanic sinks, a small boat in its vicinity would probably get sucked down with it, Zhao said in a video interview with the Post.

Still, the cryptocurrency market appears to have benefited from the outflow in capital from traditional financial markets, at least in the short term.

While traditional financial markets crashed during the coronavirus pandemic, Binance estimated its earnings at US$262.5 million in the first quarter, mainly from transaction fees, according to a spokeswoman. It also saw a 47.4 per cent rise in the number of new institutional investors in the first quarter of this year compared to the previous quarter, she said.

Prices of bitcoin, the world’s largest cryptocurrency, crashed from about US$7,900 to just under US$5,000 in mid-March, when the US stock market was hit hard. Bitcoin prices had recovered to about US$9,200 as of Monday, far below its peak of more than US$19,000 in December 2017 but still up from US$7,200 on the first day of the year. Meanwhile, global stock markets have also rebounded somewhat since the worst of the pandemic’s impact.

“I think Covid-19 has probably been a net positive for cryptocurrencies,” said Zhao. “Covid-19 has overall caused a lot of stress in the traditional financial markets, and some of the measures that people have taken are actually pushing people into cryptocurrencies.”

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