Opinion Binance is setting Aside another 1 billion USD in Crypto for its Recovery Fund

Binance is setting Aside another 1 billion USD in Crypto for its Recovery Fund

November 26, 2022

The biggest digital currency exchange is taking more money from its coffers and putting it inside its shared crypto recovery fund. The additional sum is around one billion USD, but other positive news for the same project keeps emerging as well. Jump Crypto and Aptos Labs are just some of the big players in the cryptocurrency arena that are now joining Binance in this venture. The key man behind all of this is of course Changpeng CZ Zhao, the CEO of Binance. His vision as well as those moments where his determination played a big role in shaping the present crypto market (for better or worse) is a clear guiding force behind this fund as well. 

Overall, its presence is undoubtedly one of the most important financial mechanisms that are taking shape in the ongoing crypto winter which might play a big role in its eventual evolution and then a return to a more bullish-oriented market. However, many analysts agree that the issues that CZ and BInance will face are huge and among them, time is the most prevalent one. But, once more, those who support the digital currency exchange and its chief executive operator believe that these very things, even if they stand a chance of failure, are what the present market full of gloom and despair actually needs. 

Growth of Funds

Not long ago, Binance revealed that it is preparing its crypto recovery fund as a concept. Back then, it stated that it is setting up a sum of one billion USD. Now, the same company allocated an additional billion, bringing their stake in the recovery fund to 2 billion USD. That is an insanely large amount of money but this digital currency exchange clearly feels ready to commit to it. 

CZ is also fully behind the idea and is most likely spearheading it in terms of public awareness related to the whole setup. That is why today all esports players invested in crypto, as well as those who follow the digital currency scene, know that Binance is going to start influencing the projects and ventures they feel are worth saving. 

Industry-wide Initiative

As stated at the start, Binance is not alone in this venture and the crypto recovery fund. Jump Crypto, Aptos Labs, and other less familiar businesses are also pitching in, but on a wildly smaller scale. They are going to collectively add a sum of 50 million USD to the same fund. While this is many times smaller than the figure that Binance is planning to contribute, it still showcases a level of collaboration that is necessary for the present dire state of the crypto market. 

Others are assessing the same move as a form of soft influence and a call for other digital currency ventures to take part. That includes some direct competitors to Binance and entities that might be outside of the crypto space. Both options would greatly influence the further trajectory of the fund and how it can assist and help ventures that are currently suffering but will suffer even more in the coming months. 

Fund Purpose

The main idea of the fund that Binance and other partners are preparing is its ability to buy crypto assets that are in distress. Through market movement, smaller alternative tokes regularly fall into hot waters with their holders choosing to offload them on a massive scale. Back in 2018, when the first true crypto winter hit, many tokens did not survive it even though they might have had a promising premise or a service that was very much needed in the same period. 

That fact did not save them from collapse and a lot of blockchain networks simply disappeared in the wake of the price collapse for the BTC token and other bigger digital currencies. Fiance wants to help in ensuring that the current-day projects that offer a promise of a solid future platform do not slip and fall terminally because of short-term market instability. The success of that venture is far from certain, but CZ wants to add a new layer of protection for those ventures that Binance and the rest of the board of this fund finds worthy of survival and continued existence.

Coinbase Assistance

With Binance committed to the crypto recovery fund, many are now looking towards Coinbase for any possible reaction to this ongoing venture. As the biggest US digital currency exchange, it would make the perfect partner for Binance’s global dominance. But, many agree that such a partnership might be a bridge too far for the embattled US company. Presently, Coinbase lost 90 percent of the value of its stock since it went public in 2021. 

That means that the money is more than tight in the company and likely layoffs will further increase the pressure on the management. Allocating tens or even hundreds of millions for a recovery fund seems not very likely in that setup. Doing it with a big competitor like Binance seems even less likely, but being that 2022 so far has been incredibly unpredictable, the same remains a possibility that is on the Coinbase table.

Harsh Times Ahead

There is an absolute certainty that the crypto recovery fund will be very needed in the coming period and through 2023 since its start is about a month from now. Presently, the crypto market is under a lot of pressure, with a further downturn widely expected among traders and investors. That would take the current BTC price range from 16,000 USD to a range close or even below 10,000 USD. 

The macro elements of the economy also point in that direction. With the ongoing war in Ukraine and the pressures on Western households through inflation and the coming recession, no one is expecting crypto to perform stellarly. Because of that, the question is not if the 2 billion USD Binance recovery fund will be needed – the question is when will it start bailing out failing projects.