Digital asset space can benefit from a crypto winter
Weak projects fade away in bear markets, he added.
Bitcoin and Ethereum have seen major losses since touching their all-time highs in 2021.
Ethereum co-founder Vitalik Buterin has commented on the current crypto market outlook, noting in an interview with Bloomberg that a crypto winter would likely be “welcome” in the digital asset space.
“The people who are deep into crypto, and especially building things, a lot of them welcome a bear market,” he said.
According to him, many of these developers ‘welcome’ a crypto winter- a period where the markets experience a prolonged bearish run with crypto assets trading lower or sideways.
Bear markets are when weak projects fade away
In a bull market, many people get excited by the “long periods of prices moving up by huge amounts,” he noted. However, even as many people enjoy the soaring markets, it tends “to invite a lot of very short-term speculative attention.”
Commenting on why an extended bear market could be of benefit to the digital space, Buterin told Bloomberg:
“The winters are the time when a lot of those applications fall away and you can see which projects are actually long-term sustainable, like both in their models and in their teams and their people.”
The Ethereum co-founder’s comments on projects fading away mirror similar observations across the crypto industry. After the 2017 bull market and initial coin offering (ICO) boom, a bear market followed over 2018, with assets choppy till a new bull market set in 2020.
Of the hundreds of projects to launch and benefit from the hype that sent prices skyrocketing, the majority have since faded.
Buterin wasn’t categorical if the crypto market is indeed in a crypto winter already. However, his observations come as Bitcoin (BTC) and Ethereum (ETH) have led the broader crypto market in battling a brutal drawdown since late last year.
The crypto guru made the comments during the annual ETHDenver conference.