In a recent interview with Galaxy, Binance founder Changpeng Zhao (CZ) provided deep insights on market cycles, the convergence of traditional finance and crypto, prediction markets, AI developments, and his personal investment strategies. Odaily has compiled and translated the core content of this conversation for industry reference.
Market Cycles and Leverage Risks
CZ believes the four-year crypto cycle thesis remains valid. Current prices have retraced about 50%, far less than the 80% drawdowns seen in previous cycles. During the 2022 LUNA collapse and FTX crisis, Bitcoin fell to $16,000, but now prices are 4–5 times higher, showing a rising floor pattern. He noted positive developments such as sovereign adoption of Bitcoin, institutional involvement (BlackRock), and the listing of BNB ETFs. Regarding leverage, CZ observed that no institution has announced near-bankruptcy in the past six months, with the industry managing leverage better overall. High-leverage product sizes remain relatively small, which he considers a positive sign.
Convergence of Crypto and Traditional Finance
CZ views the convergence of crypto and traditional finance as inevitable; they should not be seen as separate industries but as a unified fintech sector. Traditional finance firms can build blockchains, while crypto companies can offer lending, savings, stock trading, and other conventional services. Decentralization and centralization will coexist long-term. CZ identifies himself as a staunch supporter of decentralization but acknowledges that centralized platforms can provide low-cost, secure services through network effects. Technological progress will push more tools toward decentralization, but centralized players (e.g., large traditional financial institutions) can also thrive within a decentralized world.
The Future of L2 and L1
Regarding Layer 2 solutions, CZ argues the future belongs to L1. He cited the example of Base paying more in licensing fees for OP technology than its actual L1 fees, and noted that Vitalik has realized L2s do not help L1, leading the Ethereum team to refocus on L1 scaling. However, CZ acknowledges that L2s still have short-term value, and a L1–L2 cycle may persist. He also praised Hyperliquid's innovation, calling it a new market segment that Binance cannot compete in (no KYC, decentralized), proving the viability of niche markets.
Investment Allocation: 70% Crypto, 20% AI, 10% Biotech
CZ revealed that his family office Yzi Labs allocates roughly 70% to crypto, 20% to artificial intelligence, and 10% to biotechnology. He emphasized that the primary goal is impact over financial returns; he would be willing to lose a billion dollars on a drug that cures a common disease cheaply. Among the investments: an artificial womb company (already tested on mice, human application 5–10 years away), a knee cartilage regeneration technology using 3D-printed scaffolds to promote cartilage growth (approaching next-phase human trials), and multiple AI robotics firms. CZ himself uses nearly all major AI apps and believes Chinese and American AI have respective strengths, but warns that AI poses existential risks while crypto is relatively benign.
