Binance founder Changpeng “CZ” Zhao said the crypto market’s roughly 50% decline over the past year is driven by a combination of forces rather than a single underlying cause.

In comments to CoinDesk, CZ highlighted geopolitical uncertainty, a reallocation of investor capital toward artificial intelligence, and the sector’s traditional four-year boom-and-bust cycle as key contributors to the extended downturn seen in 2026.

Bitcoin has been on a downward trajectory since last year, starting 2026 near $89,000 and briefly rising above $96,000 before retreating to around $60,000. Over a 12-month period, the losses are even more pronounced, with bitcoin falling roughly 50% from its peak above $126,000 last October.

Even so, CZ remains optimistic about the industry’s long-term prospects. While acknowledging that a large portion of his wealth is tied to the BNB token and the performance of Binance, he said his outlook is grounded in years of experience building within the crypto ecosystem.

He argued that increasing global transaction activity will continue to drive demand for financial technology, supporting sustained growth in the sector despite short-term price swings.

CZ also framed the surge in funding toward emerging technologies like AI as part of a broader innovation cycle, suggesting that such capital rotation is ultimately beneficial rather than harmful to crypto.

On the rise of prediction markets, he said they could enhance price discovery and market efficiency. While speculation plays a role, CZ emphasized that speculative activity is a fundamental component of financial markets, helping to provide liquidity.

Discussing regulation, CZ said potential U.S. legislation such as the Digital Asset Market Clarity Act is significant but unlikely to dictate the industry’s long-term trajectory. He expects the U.S. to remain influential in shaping crypto rules, even as other jurisdictions continue to advance their own regulatory frameworks.

He added that political developments following the upcoming midterm elections could lead to increased scrutiny of pro-crypto policies and figures, including former President Donald Trump. CZ, who previously received a presidential pardon, said he is prepared to cooperate with any official inquiries.

Although he keeps his distance from U.S. politics, CZ acknowledged that election outcomes could influence the regulatory environment. He also noted that crypto users are becoming an increasingly important voting bloc, suggesting that politicians who oppose the sector may risk losing meaningful support.