CZ straightforwardly said in the AMA: Unable to predict the market in 3 months, beginners should not touch contracts, as the volatility is too high and losses can be severe.

On January 14th, CZ shared a significant viewpoint during Binance’s Chinese AMA. He candidly stated that he cannot predict the market trend over the next three or four months, even using a vivid analogy: the U.S. President might not be able to forecast the market three or four months ahead. At the same time, he explicitly does not recommend novice users to trade derivatives, for a straightforward reason — losses caused by derivative volatility can be substantial. This statement may seem simple, but it reflects a deep understanding of the current market conditions and the risks faced by beginners.

Why CZ Said This

The market is indeed full of uncertainties

From related information, it’s clear that CZ has been expressing a cautious attitude recently. He previously warned against blindly following Meme coins, and now he has issued clear risk alerts regarding derivatives. This is not a fleeting thought but a continuous observation of the market situation. Currently, the macro factors in the crypto market are complex (Federal Reserve policies, global economic conditions, etc.), and at the micro level, there are numerous projects of varying quality. It’s truly difficult for anyone to accurately predict the market three or four months from now.

Why do beginners suffer especially heavy losses in derivatives

Compared to spot trading, derivatives have several specific risks:

• Leverage amplifies losses: The same price movement results in losses multiplied by leverage
• Forced liquidation: Rapid price swings can trigger stop-losses, leading to liquidation before one can react
• Funding rates: Holding positions long-term incurs funding costs, which can cause losses even if the market direction is correct
• Psychological pressure: High risk can lead to irrational decisions, such as frequent stop-losses or adding to positions

Beginners often lack risk management experience and are prone to crashing in these areas. Data from whale addresses in related information shows that even experienced large traders holding positions over 30 days face hundreds of thousands of dollars in funding costs; the situation for beginners can be imagined.

What Does This Reflect

CZ’s words essentially mean: The market is currently in a highly uncertain state. If industry leaders like Binance admit they cannot see clearly, beginners should be even more cautious about blindly betting. Compared to derivatives, spot trading is more controllable and suitable for beginners to start accumulating experience.

Summary

CZ’s core advice is clear: it’s not that derivatives cannot be traded, but that beginners should not trade them. Derivatives are high-risk tools that require sufficient knowledge, risk management skills, and mental resilience. When the market itself is full of uncertainty, betting on the future three or four months with high leverage is a game of unfavorable odds. Instead of listening to various market analyses, it’s better to heed CZ’s straightforward advice: trade what you can afford to lose, rather than trading derivatives you don’t understand.