Vitalik thinks a ‘crypto winter’ would be good for the industry
Will cryptocurrencies repeat their performance in 2018? If so, Ethereum founder Vitalik Buterin thinks it could benefit the industry.
For nearly 3 months, cryptocurrencies have been in sharp decline from their stock market peak. The average loss of the sector reduced to its ATH is currently estimated at nearly 45%. So the return of a “crypto winter” seems to be imminent.
Especially since at the macroeconomic level, this windfall of liquidity that has supported the crypto rally over the past two years could end with the passage of a tightening monetary policy from the major central banks .
If investors in digital assets fear the “crypto winter”, Vitalik Buterin is rather optimistic about the possible arrival of this event. Highlighting the argument of resilience, the founder of Ethereum believes that this period would be the time to assess the true potential of the projects that have exploded over the past two years.
Are We About To Have A “Crypto Winter”?
Although there is no specific definition for the expression, the “crypto winter” is referred to as a period during which there is a flattened trend in the cryptocurrency price curve. This was the case during the year 2018 when the market corrected by more than 75% after the highs of 2017. Some experts even speak of a “crypto winter” between January 2018 and March 2020 because during this period cryptocurrencies did not experience a real prolonged bullish movement.
Since the market hit 3 trillion during November, it has already seen a 50% drop when it plunged towards 1.5 trillion during the day on January 24. Statistics that are still far from those we saw in 2018. Let’s take bitcoin as an example. The asset had fallen 70% in two months after peaking in January 2018. Its price fell from $20,000 to $5,900 between January and March.
However, if the context of global volatility continues, cryptocurrencies will go straight towards this dark period. Senior Financial Analyst at FxPro, Alex Kuptsikevich says;
Rising interest rates and depleting private savings will play against the cryptocurrency market, setting the ‘crypto winter’ on the model again. from what we saw in 2018
However, it is important to clarify during these three months of decline, there have been some attempts at bullish reversal. The latest is the one that propelled cryptocurrencies to $2.05 trillion. This is why it is still early to assert a return to a crypto winter.
When To Evaluate Resilient Projects
During his speech at the ETHDenver festival, Vitalik Buterin declared that he “ welcomes the return of the crypto winter,” recalling in passing that while the rise in crypto prices has favored adoption but it has also attracted investors. short-term speculation. He made a point of adding that he does not know if the situation the market is currently in is a “crypto winter” or just a period of volatility like in May.
Projects with no real technological added value have seen their value multiplied by 10, 100 and more. For the founder of Ethereum, a crypto winter would be a time of slaughter where only solid projects will withstand it. Let’s not forget in 2017 with the ” ICO crisis “, quite a few scams sprung up in the cryptoverse. More than 12,500 projects were listed by the data aggregator, Coingecko during this year. With the crypto winter, over 75% of them were gone. This is why the crypto billionaire clarified:
The winters are when a lot of these requests fall and you can see which projects are truly sustainable in the long term, both in their models, in their teams and in their staff.
“And it will undoubtedly be the time to curb speculative trading,” hammered the founder of Ethereum