Vitaly Buterin: “Crypto Market on the Verge of Another Winter”, Refused to Specify Its Expected Depth and Duration

In a highly prominent interview with Bloomberg, Vitalik Buterin, the co-founder of Ethereum coin and namesake world’s largest crypto network, said he ostensibly believed that the crypto industry is going to benefit from a downward correction that smells of cold and memories and crypto winter.

“The people who are deep into crypto, and especially building things, a lot of them welcome a bear market,” Buterin said during an interview. “They welcome the bear market because when there are these long periods of prices moving up by huge amounts as it does – it does obviously make a lot of people happy – but it does also tend to invite a lot of very short-term speculative attention.” – Buterin said in that interview (well, to some degree – our remark) “ – but at the same time, such periods attract many speculators and hunters for a quick profit.”

“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,” he added. Yet Buterin, who said he’s been “surprised” by how erratically the market has moved since last year, isn’t sure whether crypto has entered another winter or “the sector is just mirroring the volatility in broader markets”.

“In winter, many projects die off, it becomes clear who is viable and focused on long-term results, who have reliable teams and stable business models,” he added. Buterin looked also “surprised” by how the market has changed since last year, but he is not sure that another winter has begun in the industry. Perhaps the current dynamics only reflect the volatility in financial markets in general. “It really seems like a switch has been flipped in the cryptocurrency markets and they have moved from a niche group populated by very specific participants and not connected to traditional markets into the category of mainstream assets,” he added. He also believes that the crypto winter will help those who create cryptocurrency projects to focus on improving the technology.

As we certainly remember, many major cryptocurrencies had hit record highs in early November as markets waited for major central banks to inject more cash into the global economy at the dawn of the Covid pandemic. The Bloomberg Galaxy cryptocurrency index has fallen by about 45% from its all-time high. In its turn, Ethereum (ETH), the native currency of the world's most widely used blockchain, has fallen by about 40% over the same period and is now trading at around $2,690 apiece.

The previous crypto winter occurred in 2018, and since then the sector has flourished. More than 12.5 thousand tokens are registered on the site that monitors the dynamics of prices for cryptocurrencies, and their total market cap constitutes around $1.9 trillion. The inflow of funds in the industry during the last bull market instantaneously enriched some swift-to-act people. In applications created by people who came into the industry only for a quick buck, pump-and-dump scams weren’t, unfortunately, infrequent.

In recent years, Buterin has been largely focused on scaling Ethereum, often having been criticized for the slowness of transactions and the permanently rising price of Ethereum “gas”. Led by Buterin, the Ethereum Foundation is now working on a multistage project in order to improve scalability and make key changes to the ecosystem. “When everyone tries to use blockchains again,” Buterin said. "We don't want them to find out again that no, there really isn't enough room on the web for everyone."