ETH creator Vitalik Buterin thinks that the crypto market crash has its benefits

Ethereum (ETH) creator Vitalik Buterin believes that the decline in prices for crypto has certain benefits. During an interview with former Bloomberg Opinion columnist Noah Smith, Buterin said that the crypto market crash could reveal weaknesses of digital currencies.

ETH creator Vitalik Buterin thinks that the crypto market crash has its benefits

According to Buterin, unsustainable business models can be successful during the rise of the crypto market, when all assets are going up. Moreover, this process can be temporarily propped up by the influx of new dollars.

Terra’s UST algorithmic stablecoin collapse was a good example of how price crashes reveal unsustainable business models.

During the UST collapse, it became clear that this model no longer works. This is most noticeable in extreme situations like Ponzi schemes or high leverage.

This is also true in other situations. For example, it is easy to develop a product during price increases in the market. However, when prices start to drop, it becomes difficult to financially support a large development group.

Buterin believes that the volatility of crypto assets in the medium-term horizon will reduce to a level similar to the traditional assets. So, crypto assets will become no more volatile than the stock market or gold.

A similar opinion is expressed by SEC commissioner Hester Pierce. She noted that the price reduction in the crypto market will be profitable for the industry. However, bad actors can exploit the situation, so Pierce recommended investors to be cautious about crypto projects that promise high returns.

This spring, Terra Labs’ UST stablecoin has lost its peg to the U.S. dollar due to the collapse of the crypto market.

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