Vitalik Buterin is the inventor of Ethereum. He spoke to us about the current market state, dynamics and impact of the cryptocurrency winter on developers. The second crypto by market cap has displayed a week with low volatility as it prepares to complete its migration to a Proof-of-Stake consensus with “The Merge”.
Ethereum (ETH), which trades at $1610, has a 3% profit over the last 24hrs and a 5% drop in the past week. Large cryptocurrency have moved sideways, and could continue to see low volatility in the coming weekend.
Vitalik Buterin met Noah Smith to discuss the negative aspects of crypto markets. Since the inception of Ethereum, Vitalik Buterin has been involved with this market for more than a decade. He is well-versed in its fluctuating ups, downs, and general history.
Vitalik Buterin stated that it was no surprise that the cryptocurrency market crashed. In the past, the price of larger cryptocurrencies trended upwards for “around 6 to 9 months” before crashing, according to Buterin.
The bull run lasted for an additional one-and-a half years. This was unexpected by anyone who is familiar with crypto market dynamics. Unlike new participants, attracted by rising prices and profits, Buterin claims he was sure the “bull market will end”, but was unsure when. He said:
When the prices are rising, lots of people say that it’s the new paradigm and the future, and when prices are falling people say that it’s doomed and fundamentally flawed. Reality is somewhere in between these extremes.
Accordingly to the Ethereum inventor, he admitted that he wasn’t surprised at how long the bull market lasts. However, he believes market participants might be “reading too much into what is ultimately cyclical dynamics”.
Can Ethereum Take Over “All The World’s Wealth”, Vitalik Buterin Replies
And that’s why Buterin thinks people may be looking for deeper meaning in current price actions. However, crypto trades following a historic cyclical pattern. As consequence, some projects in the space have been proven “unsustainable”.
This is the “good” or positive aspect of the crypto market’s cyclical dynamics, Buterin said referring to the collapse of the Terra ecosystem and those projects with a model unfit for bear markets. He also added:
I don’t claim to have a cure for these dynamics, except my usual advice that people should remember the history of the space and take the long view of things.
Buterin says that Ethereum and Bitcoin will perform as well over the long term than equities. The current volatility in the sector comes from an “existential uncertainty”, as time goes by, people stop wondering about the future of crypto.
The uncertainty in crypto markets decreases as investors are more confident. However, bull runs can provide diminishing returns for investors. Buterin believes bull and bear markets exaggerate two different views: crypto is going to disappear versus crypto will take over the world’s finances.
Buterin believes that truth can be found somewhere in between. Buterin’s conclusion:
The math nerd way of putting it would be: the price of crypto is stuck in a bounded range (between zero and all the world’s wealth), and crypto can only stay highly volatile within that range for so long until repeatedly buying high and selling low becomes a mathematically almost-surely-guaranteed winning arbitrage strategy.