Ethereum, the second-largest cryptocurrency after bitcoin, has not escaped the brutal crypto crash that’s wiped around $1 trillion from the market in a matter of weeks.
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The ethereum price is down around 65% from an all-time high reached last year, falling harder than bitcoin. However, other top ten cryptocurrencies, including ethereum rivals BNB, solana and cardano, as well as payment coin XRP, have seen even steeper declines.
Now, as high-profile backers desperately try to call the market bottom, ethereum cofounder Gavin Wood has warned crypto traders and investors need to “pay more attention” to the projects they invest in.
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“I would hope that people pay more attention to what is belying the currency name when they get involved in a community, ecosystem, economy,” Wood told Reuters this week during the World Economic Forum in Davos.
“The technology cannot prevent people from making mistakes but can help those who want to understand better the facts of the world, what they’re buying.”
The latest cryptocurrency crash was partly triggered by the collapse of the so-called algorithmic stablecoin terraUSD (UST) and its support coin luna. The pair had soared into the cryptocurrency top ten in recent months.
The sudden collapse of UST and luna sparked doubt over the wider crypto market, with fears spreading to the larger stablecoin tether and smaller coins such as crypto lender Celsius’ cel cryptocurrency which has collapsed by more than 70% over the last month. The terra-led crypto crash has also led to fresh calls for closer regulation of the market.
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The latest cryptocurrency surge, beginning at the end of 2020, has seen a huge number of tongue-in-cheek, meme-based or scam cryptocurrencies explode in value as traders pile into them. Dogecoin, the meme-based cryptocurrency originally created as a joke, has surged into the crypto top ten by value, creating a tumult of imitators.
This week, Scott Minerd, the chief investment officer at $252 billion asset manager Guggenheim, warned “the majority of crypto is garbage,” in an interview with CNBC, calling most of them “junk.”
Meanwhile, Wood, who was at Davos to talk up his polkadot blockchain’s partnership with billionaire Frank McCourt’s Project Liberty to decentralize the internet, appeared skeptical of attempts to regulate internet protocols.
“The internet has no real concept of legality, because legality is something that is determined by sovereign nations,” Wood told Reuters.