An interview with CoinEx at the WOW meeting

In this insightful interview at the WOW Summit in Hong Kong with Bonnie Chan, VP and Chief Researcher at CoinEx, we explore the company's future plans, its strategies for taking advantage of the current market conditions, and what sets it apart from its competitors. .

We explore Bitcoin's integration into established financial systems, the impact of new technologies on its functionality, and the impact of changes in the global economy on its aesthetics.

Let's dive into the interview to learn more about one of the most anticipated future platforms of cryptocurrency.

How do you respond to the current market situation, what is your product and business plan near you?

The recent bull market rally has created excitement across the board. Naturally, in such market conditions, users need access to information to facilitate the decision-making process. As a result, we prioritize delivering valuable content to our users through platforms such as CoinEx Research and CoinEx Academy. We also plan to introduce various products including P2P, Staking and Copy Trading to meet the needs of our users and enrich their trading experience. Although there is a large market, we are steadfast in our commitment to long-term growth over short-term gains by processing change in a transparent and accountable manner.

After attending the conference, what are the unique and advantages that you see in Coinex compared to other related companies in the industry?

Compared to other platforms, our key strengths lie in our diverse range of assets, global presence and comprehensive range of services and products. When it comes to assets, we prioritize a “good, fast and comprehensive” approach to help users proactively mitigate risks and identify high-quality, high-potential projects. As a global exchange, we emphasize local business development by employing strategies tailored to different regions and markets. To better serve our diverse global users, we offer support in 16 languages, 24/7 customer service and coverage in over 200 countries. Finally, our focus on refining core products and functionality, coupled with our expertise in addressing user concerns, ensures a seamless and enjoyable business experience.

How will the integration of Bitcoin into traditional financial systems like ETFs and futures markets affect the cryptocurrency's volatility and price stability after the halving after 2024?

The influx of traditional financial funds into the Bitcoin market is set to significantly increase the volume of money, which, in turn, helps stabilize inflation. Institutional investors usually come with long-term investment horizons, and are expected to contribute more to Bitcoin's price stability due to the halving. The possible participation of insurance companies and pension funds will enhance this result, adding more depth and stability to the market. Moreover, the futures market plays a vital role in price discovery, facilitating a more accurate reflection of Bitcoin's value. The entry of traditional financial entities normally brings more sophisticated and mature business strategies, leading to more efficient markets. Therefore, this evolution is expected to reduce volatility, creating a more stable trading environment for Bitcoin.

Given the potential for increased institutional investment in Bitcoin, what strategies can institutions adopt to mitigate the risks associated with post-halving volatility, and how might these strategies affect the broader market?

Asset allocation has always been key for institutional investors. Perhaps they target Bitcoin or other crypto assets, and from time to time try to align their portfolios with their risk tolerance and assigned investment goals.

The use of derivatives, including both futures and options, is also expected. By locking in prices or guaranteeing a put option at some level, institutions can insulate themselves from some of the risks associated with price fluctuations. The increased demand for derivatives will lead to a stronger and more liquid market for these financial instruments, which will facilitate better risk management tools for all market participants.

Finally, we see interest and assets under management (AUM) growing into quantitative trading strategies among institutional investors. Employing algorithms to execute market, arbitrage and delta-neutral strategies, quant funds focus on market efficiency and volatility without taking directional bets on price movements. These sophisticated strategies help stabilize the market by narrowing the liquidity supply and bid-ask spread so that all investors can trade with ease.

How will the rising trend of tokenization and the creation of Bitcoin-backed assets affect BTC and its market capitalization?

Real World Asset (RWA) was one of the trending sectors in the first quarter of the year, fueled by Ondo Finance, and BlackRock also announced its entry into the space. The range of traditional asset classes, from fixed income to stocks, real estate to commodities, far exceeds any crypto asset. If we take gold as an example, the gold market is 12x bigger than bitcoin. Therefore, the trend of tokenization and the creation of Bitcoin-backed assets will certainly open up a much wider range of financial instruments for both crypto and traditional investors, which means a greater opportunity for risk diversification. The implications of these go beyond increasing liquidity or capital flow, and are set to pave the way for bridging the gap between traditional finance and the cryptocurrency ecosystem.

Given the emergence of Ordinals and BTC Layer-2 solutions, how might these technical developments affect Bitcoin services?

Bitcoin halving often brings new narratives and we see BTC Layer 2 solutions at the forefront of this cycle. While the BTC layer 2 solutions built before 2023, such as lightning, stack, liquid or rootstock, are generally simpler and focus on improving Bitcoin's primary use case as a payment system and store of value, we note that the new solutions are starting from 2023 onwards. They have paved the way for a wider spectrum in terms of Bitcoin services.

Among these innovations, Merlin's blockchain with a total value of more than $3.5 billion, which integrates zk-rollup technology, stands out for high throughput and privacy of transactions on the network. Similarly, BEVM introduces EVM compatibility with the Bitcoin Layer-2 ecosystem, allowing decentralized applications (dApps) from the Ethereum network to run seamlessly on the Bitcoin infrastructure, thus connecting the two most important ecosystems in the crypto space.

In addition, the emergence of Babylon as a staking protocol introduces the concept of Bitcoin staking, providing a new method for users to earn rewards, which is not similar to the previous design of Bitcoin. In addition, Nubit contributes to increasing the functionality of the ecosystem by serving as a data access layer, ensuring that the data necessary for the operation of these advanced protocols is accessible and secure.

In short, we think there is much more to come in terms of the Bitcoin ecosystem and utility, and we look forward to seeing the investment implications.

How might the evolving landscape of mining technology and energy consumption impact the security of the Bitcoin network and, by extension, investor confidence in the post-2024 cryptocurrency market?

As mining hardware becomes more efficient, the mining difficulty algorithm is adjusted to maintain a consistent block production rate. Some miners may be forced to shut down due to the impact of factors such as rising energy costs or falling bitcoin prices. This generally results in a reduction in the computing power of the network. Despite this, the entire Bitcoin mining industry is currently a large global market with many participants that leverage the strength of the overall network.

Regarding energy use and environmental issues, although improvements in mining technology can increase the energy efficiency of mining hardware, the influx of more miners can result in a net increase in the overall energy consumption of the network. Therefore, ever-increasing environmental risk and the possibility of regulatory intervention may continue to challenge the sustainability of Bitcoin mining. For investors, several aspects of the Bitcoin network stand out as resilient: its adaptability, the strength of the mining community, and the increasing sophistication of Bitcoin participants. These factors may attract more attention from investors, especially in light of the expected Bitcoin halving.

In what ways will the development and adoption of competing cryptocurrencies, especially those with advanced technology or utility, affect Bitcoin's dominance and halving of price movements?

We believe that different cryptocurrencies have unique positions, use cases and values. Bitcoin was primarily developed as an asset of payment and more importantly as a store of value. On the other hand, Ethereum is known for its smart contract capabilities; Solana has positioned itself as a high-performance blockchain designed for decentralized applications and transactions.

Remember that the entire crypto ecosystem is still a small asset class compared to other traditional asset classes. Thus, we assume that all competition is not zero sum. The technological advancement of various cryptocurrencies can certainly expand and expand the entire crypto market. In fact, technological advances are being played out to enable interoperability between different blockchains. We see Bitcoin benefiting from the growth of the entire sector and potentially serving as a foundation or even a reserve currency for the wider crypto ecosystem.

How might changes in the global economic landscape, such as inflation, interest rate adjustments by central banks, and geopolitical tensions affect Bitcoin's appeal as digital gold?

We highlighted in our recent research report “Bitcoin Halving” that Bitcoin's market capitalization trend appears to be correlated with global liquidity, as determined by global central banks' assets and inflation. With the Fed announcing several rate cuts throughout the year, we expect more liquidity to flow into the crypto market.

Additionally, geopolitical tensions often come with currency devaluations in countries such as Ukraine, Russia, and Venezuela. Bitcoin's key utility, the store of value, plays a crucial role in precisely that end. In conclusion, changes in the global economic and geopolitical landscape could greatly enhance Bitcoin's attractiveness as digital gold or as an alternative asset class.

Given the historical context of post-halving bull runs, what specific market indicators and metrics should investors monitor to gauge the health and direction of the Bitcoin market in the lead-up to and after the 2024 halving?

There are various market indicators and metrics for investors to gauge the direction of the market, and there are several selection tools here. At launch, the Fear and Greed Index, which combines data from volatility, market momentum and social media metrics, has emerged as a simple yet valuable indicator for retail investors.

Secondly, the balance of exchange is often seen as an important measure of the chain. A higher balance indicates that traders are depositing bitcoins into exchanges, which can lead to potential sales and vice versa. The same on-chain meter is the miner to exchange, which shows the flow of BTC from the miner to the exchange.

Unlike long-term holders, traders play in the short-term. Thus, a number of derivatives-related metrics are helpful in evaluating Bitcoin's recent direction, including leverage, open interest, and the liquidity map. Volatility is usually observed when we see an increase in demand or a heavy zone of the liquidity chart.

Final thoughts

An interview with CoinEx's Bonnie Chan at the WOW Summit in Hong Kong provided valuable insights into the company's strategic vision and impact on the cryptocurrency market.

CoinEx's commitment to providing high-quality content, its strong value and global reach in offering diversified assets, and its emphasis on current products such as P2P, Staking and Copy Trading will impact crypto trading.