Here’s why Vitalik Buterin says ETH price drops are beneicial! Despite massive crypto price crashes being viewed as a bearish event in the crypto space, Vitalik Buterin stated that he seems to think otherwise.
Beneficial For The Market
In a recent interview with former Bloomberg Opinion columnist Noah Smith, co-founder of Ethereum, Vitalik Buterin voiced his opinions that crypto price crashes, like those of Terra Luna are actually “good” for the market as a whole.
Vitalik explains that crashes and failures like this are great at exposing weaknesses, which will in turn help other cryptocurrencies and blockchain avoid making the same mistake.
“I do think that price drops are good at revealing problems that were always there from the beginning. Unsustainable business models tend to succeed during booms because everything is going up, so the money people have at their disposal is going up, and so things can be temporarily propped up by a constant influx of new dollars.” Vitalik said in the interview.
He also used Terra Luna’s crash as an example of how these crashes helped exposed faulty and unsustainable business models.
“During crashes, as we saw with Terra, this model no longer works. This is most true in extreme situations like high leverage and Ponzis.
But it’s also true in more subtle ways like how protocol development is easy to sustain during bull markets but when prices crash the often newly expanded teams are hard to financially sustain.”
The Future Of Crypto
Aside from that, Vitalik Buterin also expressed his optimism for the future of cryptocurrencies and the crypto market in this interview, stating that in the future, cryptocurrencies will be far less volatile than they are now.
“I think that in the medium-term future, cryptocurrencies will settle down and be only about as volatile as gold or the stock market,” Vitalik said.
Vitalik’s optimism also extends to his own created blockchain, Ethereum, which is scheduled to have its long-awaited proof-of-stake merge this mid-September.
Seemingly having learned from the faults of other cryptocurrencies’ price crashes, Ethereum has been trading strongly, being known as the second biggest crypto in the world and trading at a price of $1,560 at the time of writing.
The ETH Merge is expected by many in the community, including Vitalik himself, to aid in boosting Ethereum’s efficiency and capabilities in the future.