Ethereum cofounder Vitalik Buterin says crypto builders would welcome a bear market, as it would clear out less viable apps
- Vitalik Buterin said Saturday many people in
cryptowould be happy if digital assets kept falling in price.
- A slump reveals which projects are sustainable in the long term, the
ethereumcofounder told Bloomberg.
Ethereum cofounder Vitalik Buterin has said many crypto developers wouldn't be unhappy to see a continued slide in the price of digital currencies, as the slump could clear out less-viable projects.
Cryptocurrencies have fallen in recent weeks alongside stocks, as investors grow more cautious about taking risks given persistent rises in inflation, expected interest-rate hikes by the Federal Reserve, and geopolitical tensions.
But the prospect of more losses and a bear market — generally, where prices fall 20% from a recent high — won't deter some in the crypto world, Buterin told Bloomberg.
"The people who are deep into crypto, and especially building things, a lot of them welcome a bear market," he said in an interview published Saturday.
Ethereum's native token ether has lost 35% year-to-date, down from $3,722 at the beginning of January to $2,608 at last check Monday, according to CoinMarketCap data. Leading
When crypto prices are rising and in a bull market, that attracts huge amounts of attention and encourages speculative thinking around using crypto in projects, he said.
On the other hand, falling prices separate the curious from the serious, he argued. That is why a "crypto winter" — when prices keep crashing and fail to recover for a long time — could be seen as a positive.
"The winters are the time when a lot of those applications fall away, and you can see which projects are actually long-term sustainable, like both in their models and in their teams and their people," the ethereum cofounder said.
NFT marketplace OpenSea is one example of a project that made it through the last crypto winter. It was founded in December 2017, just days before crypto prices crashed. But in January this year, it hit 1 million active wallet users and a valuation of $13 billion for the first time, having managed to hold on through that market trough.
Buterin wasn't sure whether the crypto market was already in a new winter of losses, or whether it was just mirroring moves in other assets, as digital currencies draw more mainstream investors.
"It does feel like the crypto
The losses for cryptocurrencies have come alongside sharp drops for US stocks, and techs in particular, which are suffering from a wave of risk aversion brought on by rising inflation, the prospect of a hit to the economy from expected Federal Reserve interest-rate hikes, and geopolitical tensions around Ukraine.
Read more: An investment chief for BNY Mellon Wealth Management breaks down why he's expecting stocks to bounce back by 8 to 10% this year despite recent volatility — and shares 3 investing strategies to excel in the current mid-cycle bull market
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