Vitalik Buterin believes that the cryptocurrency market is going to become less volatile the more it expands. In a recent interview with Noah Smith, Vitalik Buterin, the co-founder of Ethereum (ETH) talked about the most recent bull market in the crypto industry and how prices of some assets get distorted when the bull market gets close to its top.
Vitalik Buterin Believes in a Less Volatile Crypto Industry
The first question was related to the recent bear market that started in November 2021 after Bitcoin reached $69,000. He mentioned that he was surprised that the crash didn’t happen earlier as crypto bull markets tend to last less than a year (usually between 6 and 9 months).
In general, when the crypto market reaches the top, then a crash takes place and digital assets fall sharply in a very short period of time. Vitalik Buterin said that the most recent bull market lasted nearly one and a half years and people got used to higher prices.
About the bull market, Buterin 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. The reality is always a more complicated picture somewhere between the two extremes.”
Furthermore, he said that during bull markets unsustainable business models succeed. Everything goes up and investors have the chance to place their funds on different companies and projects that might not be developing or creating solutions for the long term. However, when the bear market starts, projects fall, similarly to what happened to Terra (LUNA) a few months ago.
When asked about Bitcoin returns during each bull market, Buterin said that in the medium-term, cryptocurrencies will settle down. Moreover, he mentioned that a lot of the volatility in the early days of Bitcoin could be related to “existential uncertainty.” It was not possible to know for people at that time whether or not Bitcoin was going to expand and reach the highs we have seen.
In the most recent bull run, Bitcoin moved from $3,200 in December 2018 to $69,000 in November 2021. It took almost three years for Bitcoin to recover from its lowest point and hit a new all-time high. Nowadays, Bitcoin is being traded at close to $19,750 and it has a market capitalization of $377 billion.
Regarding the upcoming Merge of Ethereum with the Beacon chain, Buterin stated that Ethereum is getting closer to large improvements in blockchain scalability, usability, and privacy. Thanks to this “Merge” Ethereum will transition from a Proof-of-Work (PoW) blockchain network to a Proof-of-Stake (PoS) consensus algorithm. This would help the network become much more efficient, faster, and reliable.
This would also help the whole Ethereum ecosystem to grow and expand by offering better and new services. Let’s not forget that Ethereum was the first blockchain network to allow for Initial Coin Offerings (ICOs), the decentralized finance (DeFi) market, non-fungible tokens (NFTs), and many other things. Right now, Ethereum is the second-largest cryptocurrency in the market after Bitcoin and it has a price per coin of $1,550.