Kategorie: Crypto News

• Vitalik Buterin says crypto winters help developers focus on projects and not the speculation that dominates during bull markets’
• 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.

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The largest Ethereum event in the world, EthDenver, concluded yesterday. For ten days, some of the brightest minds on the planet gathered in Denver, presenting and discussing all kinds of topics related to Ethereum.  

Still only six years old, but already at a market cap of $328 trillion, the world’s second biggest crypto offers technology that has facilitated all kinds of thrilling applications such as NFTs, DAOs and the launch of other cryptocurrencies, to name a few. So naturally, the day after the event has concluded, I want to discuss a pair of pyjamas.

Surprisingly, however, Shiba didn’t ramp. In fact, it continued to lull.

The Story

You’ll recall that last year, there was brief hysteria in the markets when Vitalik looked ready to “dump” the 50% of Shiba tokens which had been sent to him by the anonymous founder, Ryoshi, when Shiba was launched back in August 2020.

Started as a joke token inspired by Dogecoin, half the supply was sent to Vitalik, likely done on a whim; a tribute to one of the greatest minds in crypto, while seen as a funny way to “burn” (remove from supply) half the supply. And for a while, as Shiba grew steadily, that’s the way it worked – a proxy burn wallet. Vitalik likely had no idea the coins were in his wallet, or what Siba even was.

Of course, we all know what happened next. Shiba pumped north of a $14 billion market cap, and suddenly Vitalik was facing a very real moral dilemma over what to do with the approximate $7 billion dollars that he now sat on. If he sold, it would undoubtedly tank the market price, leaving investors holding the bag. But could he really sit there on billions and billions of dollars while so many around the world were struggling to make ends meet?

He decided he couldn’t, preceding to donate a billion dollars worth of SHIBA to the Indian COVID relief fund. Broadcast live on the blockchain, Vitalik’s transaction sent the Shiba price into freefall as the market feared Vitalik was about to donate his entire stack – “Vitalik is dumping on us!”.

The Dilemma

I really felt for Vitalik in a way. It’s a mind-boggling amount of power for one person to hold; he never asked for that immense responsibility – the tokens were sent to him without consent, when nobody even knew what Shiba was. It was a colossal amount of money that could help a lot of people, regardless of whether the coin’s founder sent him the amount with the expectation that he would just burn the tokens.

“I don’t want to be a locus of power of that kind” – Vitalik Buterin

The Shiba community was incensed. But Vitalik subsequently burned the remaining tokens which he held, somewhat redeeming himself to the Shiba faithful. The market stabilised and the price recovered (it even rocketed to a new all time high five months later, sitting at a $40 billion market cap).   

So…What do the Pyjamas Actually Mean?

It’s a crazy tale, but with Vitalik sporting Shiba pyjamas at the conference, it looks like he has made peace with the chaotic meme coin. There doesn’t appear to be any deeper meaning, aside from Vitalik just goofing around. The market also seems to agree, looking at the muted price response. So perhaps it should merely be viewed as a light-hearted conclusion to how a stranger-than-fiction story of how a 27 year-old computer whizz became the reluctant protagonist in a surreal tale tying together doggy memes, thousands of overnight millionaire investors and a country struggling under the weight of a COVID crisis.  

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