Ethereum’s Co-founder Vitalik Buterin feels that the current market downtrend which is being viewed as another crypto winter might be in fact favorable for the digital asset industry as a whole. Referring to the ongoing price slump in the crypto market since achieving record highs in late November, Buterin believes long-term market players welcome the bear market.
But then it also invites a lot of very short-term speculative attention, he added. The recent sharp sell-off has spooked both investors and speculators who are predicting a reduction in the amount of stimulus in the wake of the Covid pandemic. Ether for one has tanked by nearly 40% during the same period.
Since the last “crypto winter” in 2018, the sector has boomed, attracting a massive amount of investments. Besides creating overnight millionaires and billionaires, the industry has also seen several market manipulation schemes such as pumps and dumps.
For the initiated, these are a form of securities fraud that involves inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply bought stocks or security at a higher price.
Buterin thinks winter as the determining factor for projects
Buterin in the Bloomsburg interview said that winters are the time to determine the survivability of crypto projects in the long term. Still, the 27-year-old crypto billionaire expressed surprise over how the market has evolved since last year, isn’t sure whether crypto has entered another winter or the sector is just mirroring the volatility in broader markets.
“It does feel like the crypto markets kind of flip the switch from being this niche group that’s controlled by a very niche group of participants and it’s fairly disconnected to traditional markets into something that behaves more and more like it is part of the mainstream financial markets.”
He further added that a crypto winter can also help those who are building projects in crypto focus on improving the technology.
Not all share the same with some experts even believing that the crypto market is headed towards something worse. This is what Invesco’s global head of asset allocation research, Paul Jackson told in a recent interview. The exec warned that the crypto seems to be heading for an “ice age,” where prices stay low for a prolonged period and many investors eventually lose interest.