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What does the Ethereum crash mean for Vitalik Buterin?

Photo of: Joseph Stone
by Joseph Stone

The more than 50% drop in ETH’s value since mid-May represents a $400 million loss for Ethereum co-creator Vitalik Buterin.

Like Bitcoin, Ethereum has been in free fall since the cryptocurrency crash. In the space of just over a month now, the price of Ether had fallen from $4,000 to around $2,000. On June 22, its price even dropped below the $2,000 mark.

On a rebounding crypto-asset market on June 23, however, the price of ETH is back above this almost symbolic threshold. For one of the best endowed holders of Ether, Vitalik Buterin, the ‘loss’ is major.

Forbes estimates that the capital of the co-founder of Ethereum was melting by more than $ 400 million in recent weeks. According to Messari, between June 22 and May 12, ETH plunged from $4,338 to $1,938.

Thanks to the explosion in the price of Ether, Buterin had thus become the richest cryptocurrency billionaire at just 27 years old. This status of great crypto fortune, the co-creator of Ethereum acceded to it when the price of ETH surpassed the threshold of $ 3,000.

With his 333,520 ETH, Buterin then held a capital valued at $1.09 billion. Those Ethers are now worth less than $700 million. His crypto assets are dropping precipitously, to be sure.

However, it’s hard to call it a ‘loss’ at this point. A large portion of these tokens were originally acquired for the Ethereum blockchain project. And their value then was nowhere near $2,000.

So, even though for less than 2 months, Ether has lost more than 50% of its value, its price still explodes over a year. At the end of June 2020, ETH was trading at less than $240. Over one year, the price has therefore increased by a factor of 10.

The Ether is still showing spectacular returns over 12 months. And the losses are therefore mainly for traders who entered the market in recent months when the cryptos were soaring.

As Pantera Capital boss Dan Morehead recently pointed out, new investors rush to buy when the market is rising. Then, they flee as soon as there are signs of a fall.

And when that happens, they leave with losses. If there was a bubble in the market, it has now largely subsided. Major cryptocurrencies are now much more accessible. Enough to justify buying?

“For new investors, it is best to buy when the market is below trend. This is the case today. The market has only been as ‘cheap’ or cheaper than the trend for 20.3% of the last 11 years,” says Dan Morehead.