After months and months of seemingly moving in only one direction, upwards, the cryptocurrency market has been subject to a huge crash over the last week or so, which has shocked many investors all over the world. The likes of Bitcoin and Ethereum lost around half of their value in the space of 48 hours or so last week, which has brought all the optimism and positivity around the market to a shuddering halt. Amid this, it is therefore quite surprising that Vitalik Buterin, the 27-year-old co-founder of Ethereum, has not been surprised by this crash, even though it has wiped out a significant chunk of his own wealth.
Ether, which had reached a lifetime high of $4,384 on 11th May, had crashed below $1,900 on 19th May, which has a staggering drop of more than 40% in just 24 hours. The token has rebounded somewhat to be trading at around $2,100 at the moment, but that is still quite a drop from its lifetime high, which had been reached just a few weeks earlier in May 2021 itself. Buterin had stated in an interview to CNN Business that he believed cryptocurrencies to be in a bubble and that it was notoriously difficult to predict when these bubbles would pop.
This nosedive in Ethereum’s value has cost Buterin dearly, as it has removed his status as a crypto billionaire. The value of the Ethereum in Buterin’s public wallet, which is watched very closely by the market, was at around $870 million, a significant drop from the value of $1.1 billion that it had reached earlier in the month.
However, this has not seemed to faze Buterin at all – this is the third boom-and-bust crypto cycle that he has been through, as he himself stated in that interview. He has also said that the reason these bubbles are popping is that there is some event or the other that makes it clear that the technology to support and grow cryptocurrencies just is not there yet. Of course, those who track and follow the crypto market will know about Ethereum’s potential, as one of the reasons why Buterin founded it was to introduce a cryptocurrency that tackled the issues and failings of Bitcoin. Thus, while Bitcoin is considered ‘digital gold’, Ethereum’s blockchain has proved extremely valuable for those developing apps, and it has been likened to the Android or iOS of the crypto space. Ethereum, therefore, has a lot more potential than Bitcoin to change the way industries operate, and many observers believe that this token will eventually overtake Bitcoin as the world’s largest cryptocurrency. It is interesting that Buterin himself also entertains this thought as a “possibility”.
Buterin has always been a skeptic of just how quickly the crypto space has grown. Back in 2017, when the market was seeing a similar wave, he had sent out a number of tweets that questioned whether the market valuation, which was at around half a trillion dollars at the time, had really been earned. He pointed out just how little had been accomplished by cryptocurrencies, and soon enough, the bubble had burst, with prices falling by over 50% in the space of a couple of days. However, the difference this time is that Buterin seems to be extremely encouraged by the progress made by technology and crypto applications since then. For example, one of the reasons why Ethereum activity has increased by so much in the last few months is the craze around non-fungible tokens, or NFTs, most of which are sold on Ethereum-based networks. According to Buterin, “crypto isn’t just a toy anymore”, and it is now close to becoming mainstream in a way that was not possible four years ago.
One of the biggest issues with cryptocurrencies is their volatility, as crypto tokens are still subject to wild price swings based on statements and actions by a few perceived key individuals. One of them is Elon Musk, the CEO of Tesla and SpaceX, who has been one of the biggest public supporters of the crypto industry. However, he has also been negative towards the likes of Dogecoin and Bitcoin recently, and one such action by Tesla, which stated that it would stop accepting Bitcoin payments due to concerns around the cryptocurrency’s environmental impact, has been one of the biggest reasons for the current crash.