The development of cryptocurrencies creates a lot of debates in the financial markets. While nearly all investors dream of seeing digital assets at the top of the financial system, other people don’t. Separate order book or not? Changpeng Zhao “ CZ ”is absolutely against this idea. Find out why.
Liquidity: protection for consumers?
Media coverage of cryptocurrencies does not necessarily appeal to everyone. While some see it as a way to make easy money, others see it as a danger to the traditional financial system. Regulators around the world are still looking for ways to stabilize the industry and keep it in check. However, decentralization of cryptocurrencies is probably one of its strengths.
After much criticism of these activities, some countries are now calling for a separate order book. But then, this tip isn’t for everyone because CZ is against this idea. Binance CEO expressed his views in a tweet July 31. According to him, there are many reasons why separating money is anything but a good idea.
The main reason is above all consumer protection. This is because liquidity splitting will lead to a further increase in volatility. Big players will have a better chance of swinging the markets. As a result, market manipulation will take on an unprecedented scale and small consumers will have to pay the price.
More liquidity for a better cryptocurrency investment?
Cryptocurrency markets are sometimes difficult to follow. The volatility of cryptocurrencies can be a strength as well as a negative. Indeed, uncertainty in the markets can make you money just as it can cause a lot of losses. In this logic, high liquidity becomes even more important and that is what CZ stands for.
The Binance president is convinced that the separation of the order book will only be to the disadvantage of some investors. According to him, liquidity acts as an intermediary on exchanges. In fact, some users only trade with the order book and do not choose a counterparty.
In addition, the high liquidity also has many advantages that should not be forgotten. Between lower slippage and tight spreads, it has a real financial impact for traders. Hence, the cryptocurrency sector needs this liquidity to stay afloat and continue to grow.
The cryptocurrency industry has a lot of risks and if everyone starts moving prices, the market will collapse. CZ believes countries that want a separate order book are wrong. Liquidity has advantages that markets cannot afford to lose, especially given the current downtrend.
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The world is changing and adaptation is the best weapon to survive in this undulating universe. As the crypto community manager at the base, I am interested in anything directly or indirectly related to the blockchain and its derivatives. To share my experience and introduce a field that fascinates me, nothing better than to write informative articles and relax at the same time.