Vitalik Buterin, the Ethereum ETH/USD blockchain co-founder, recently said that the decline in the price of crypto assets is suitable for the market as it will expose weaknesses.
He said that the collapse of the native token of stablecoin issuer Terra LUNA/USD is a great example of price crashes exposing unsustainable business models.
“During crashes, as we saw with Terra, this model no longer works. This is most true in extreme situations like high leverage and Ponzis (veterans of 2017 will remember ‘BIT-CONNE-E-E-E-ECT!!!’),” he added.
However, Buterin said that protocol development is easy to sustain during bull markets, but when prices crash, the often newly expanded teams are hard to maintain financially.
“Unsustainable business models tend to succeed during booms because everything is going up, so the money people have at their disposal is going up, and a constant influx of new dollars can temporarily prop things up,” Buterin said.
Buterin feels that the volatility of crypto assets will reduce in the “medium-term future” to a level similar to traditional investments.
“I think that in the medium-term future, cryptocurrencies will settle down and be only about as volatile as gold or the stock market,” he said.
Earlier, Buterin said he expects crypto only to be as volatile as gold or the stock market in the next few decades.
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