The past couple of months haven’t been kind to the cryptocurrency market. While cryptos had been steadily declining over the first half of the year, the crypto market crashed in June 2022. Bitcoin prices sank below $20,000 for the first time since late 2020, and Ethereum fell below $1,000. When the dust had settled, major cryptos such asBitcoin and Ethereum had lost more than 50% of their value while a multitude of other cryptos lost more than 90% of their value.
Unsurprisingly, investors around the world, especially those who invested big in crypto, have been worried about the future of the market. Cryptos and blockchain were sold as a revolutionary new technology that could bring online commerce into the new age, but in the wake of the crypto winter, many of them are understandably concerned. However, according to one expert, the volatility within the cryptocurrency market will gradually stabilize.
During a recent interview, Ethereum cofounder Vitalik Buterin was asked about his views on the current state of crypto as well as the future of blockchain technology. He predicted that crypto volatility will stabilize just as gold has in the near term. In fact, Buterin said that he was surprised by the fact that the ongoing crypto bear market didn’t kick in sooner. As crypto prices rose, Buterin was sure those prices would eventually drop even though he didn’t know exactly when this would happen.
He said that crypto has always had cyclical dynamics and will continue to operate in this way for some time. Buterin noted that it feels as if the people who don’t understand this cycle are reading too much into it and predicting doom and gloom when this is just the market’s natural cycle. Historically, cryptocurrencies have gone through four-year market cycles, which roughly align with the four-year halving of Bitcoin’s supply issuance rate.
These halving cycles have been associated with a consistent rise in Bitcoin’s price floor as well as an increase in percentage returns. As such, Buterin believes that crypto is currently in the midst of an adoption curve where the market will eventually become saturated and achieve price stability similar to gold. He said that cryptos will settle down in the medium term and will have similar volatility levels to gold or the stock market.
Although he doesn’t know exactly when this will happen, he predicts cryptocurrencies will continue to answer more of their “existential questions,” that is, why do they exist and what problems can they solve, and this could make them more stable.
For some companies such as Coinbase Global Inc. (NASDAQ: COIN), stability may be viewed from the angle of increasing market penetration and coming up with even more products to meet the needs of their millions of registered users.
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