Speaking at the annual Ethereum (ETH) developer conference in Denver, Colorado, Vitalik Buterin said many of the people building stuff in the cryptocurrency space would welcome another bear market.
"People who are deep in cryptocurrencies, and especially in building things, many of them welcome a bear market."
Buterin spoke to Bloomberg, adding that prolonged periods of upward price movement makes many people very happy, "but it also tends to invite a lot of short-term speculative attention."
Another cryptocurrency winter?
A cryptocurrency winter refers to a prolonged period of bear markets where digital assets are either sold out or traded sideways. The precedent lasted for most of 2018 and 2019 as cryptocurrency markets dumped 88% from their January 2018 peak market cap of $ 830bn to bottom at around $ 100bn in December of the same year.
The following year saw very little action in the markets and they began to thaw seriously from that winter only in mid-2020 following the Bitcoin halving event (find out how buy Bitcoins).
Today, markets are cooling down from their all-time high in November of just over $ 3 trillion. They have currently fallen by around 38% since that peak, so there may still be a lot to fall if another crypto winter were to follow. Such a massive crash like the one that occurred in 2018 could send total market capitalization to around $ 400 billion.
Now the cryptos are mainstream
Buterin commented that cryptocurrencies appear to have flipped a switch from being a niche market controlled by a small group to something resembling a more mainstream traditional financial market. On the premise of another winter, he added:
"Winters are the time when many of these applications fall and you can see which projects are actually sustainable in the long run, as in their models and their teams and their people."
He still wasn't sure that the markets had entered another winter phase or that they were just mirroring the volatility in the larger markets. Markets need correcting and winters give teams time to focus on building, but they also eliminate weak projects and only strong ones tend to survive.
Cryptocurrency markets today
The cryptocurrency markets fell again over the weekend. Total market capitalization dropped to just over $ 1,8 trillion as Bitcoin and Ethereum recorded losses. There was a slight upside during the Asian trading session on Monday morning, but the overall trend over the past two weeks has been range-bound to bearish as major tokens fail to break through resistance levels.