The crypto-verse has been experiencing extreme volatility over the last couple of days. Binance’s CEO, Changpeng Zhao aka CZ, addressed this constant rise and fall in the price of cryptocurrencies over the last couple of days.
Volatility has been a great drawback for the crypto industry. While abrupt soars in the price of certain coins can bring extreme joy, untimely drops can cause a commotion. Individuals who seem to be intrigued by the industry have been sitting on the fence fearing volatility. The recent drop of Bitcoin [BTC] from a high of $64K to a low of $48K was noted as a classic example of the latter.
Appearing in Bloomberg’s latest interview, CZ went on to reveal his take on the extreme volatility that the crypto industry hoards.
Binance’s CZ Blames Herd Mentality For Volatility
Bitcoin’s price volatility is directly linked to herd mentality, Binance’s CZ pointed out. Comparing those who enter the crypto-verse, CZ noted that those who invest in crypto were through herd mentality were outdoing those who did their research before investing in the market.
While the price of crypto is usually dictated by the buying and selling activity of these assets, people who enter the market when there’s good news and rush out during bad news are the one’s behind the volatile nature of the industry, CZ asserted. Speaking about the same he added,
“The herd followers are less committed. Whenever there’s some negative news, they run away. Whenever there’s positive news, they try to rush in.”
Furthermore, just as the price of digital assets rose over the past couple of months, institutional investors started pouring their funds into it. CZ pointed out that certain large institutions were keen on “volatility trading.”
Debunking the myth of more institutional trading equals less volatility, the CEO of Binance added,
“They [institutions] seek volatility and they sometimes even want to generate the volatility. So it’s not to say that just because there’s more institutions trading, then there’s less volatility.”