The growth of cryptocurrencies sparks a lot of discussion in the financial markets. Some people do not share the nearly universal investor ideal of digital assets dominating the financial system. Do you use a separate order book? CZ, Changpeng Zhao, is vehemently opposed to this notion. Learn why.
Consumer protection through liquidity
Not everyone finds the media’s coverage of cryptos to be interesting. Others see it as a threat to the established financial system, while some see it as a method to make quick money. Regulators continue to search for strategies to control and stabilize the industry. Cryptocurrencies’ decentralization, though, is undoubtedly one of its advantages.
A separate order book is now being requested by some nations following intense criticism of these assets. Nevertheless, not everyone will agree with this suggestion because CZ is opposed to it. The CEO of Binance shared his opinions in a tweet on July 31. He claims that dividing cash is a bad idea for a variety of reasons.
Consumer protection is the key justification. This is due to the fact that the liquidity split will result in increased volatility. Large operators will be more likely to cause market volatility. Small consumers will be forced to pay the price as a result of unprecedented market manipulation.
More liquid markets for better cryptocurrency investments?
It might be challenging to keep up with the cryptocurrency markets. Cryptocurrency volatility has both positive and negative aspects. The markets’ illiquidity can, in fact, lead to both significant profits and losses. According to this reasoning, great liquidity becomes even more crucial, which is what CZ stands for.
The Binance president is persuaded that the order book’s separation will only hurt some investors. He claims that liquidity serves as an exchange’s broker. In fact, some users never select a counterparty and merely trade with the order book.
High liquidity also brings a number of benefits that should not be overlooked. It has a significant financial impact on traders due to lower slippage and tight spreads. Therefore, this liquidity is essential for the crypto industry to survive and develop further.
The cryptocurrency industry is fraught with danger, and the market will collapse if everyone tries to manipulate pricing. CZ is certain that nations which desire a separate order book are mistaken. Markets cannot afford to lose the benefits of liquidity, particularly given the downturn that is currently underway.
