With trillions lost in last week's unprecedented crash that hit cryptocurrencies--such as Bitcoin, Ethereum and Dogecoin--the billionaire Mark Cuban has put some perspective on why it happened, and why we can expect the digital tokens to make a huge rebound soon.
Ethereum Value Drop Due to 'Great Unwind'
On Twitter, Cuban described the crash as the "Great Unwind," suggesting that investors have decided to unload their earnings due to the many factors affecting the market as of late. Quite notable was China's ban on cryptocurrency trading that sent shockwaves that led to the massive sell-off.
"Traders borrow to buy Eth, used eth to borrow alt/stable coin, used that to LP a high APY Pair, took the SLPs and staked them to maxout yield," Cuban explained in his tweet.
He further concluded that as ETH would fall to its "tragic number," investors had to "Unwind. Unstake, Remove Liqu(i)dity, Repay."
I think this is the "Great Unwind". Traders borrow to buy Eth, used eth to borrow alt/stable coin, used that to LP a high APY Pair, took the SLPs and staked them to maxout yield. The minute Eth drops to their Tragic Number, they had to Unwind. Unstake, Remove Liqudity, Repay.— Mark Cuban (@mcuban) May 23, 2021
However, in a succeeding tweet, Cuban sees that enormous recovery for the cryptocurrency, with the entry of what he calls "new money" into the market.
Mark Cuban Tweet: Support Levels 'Unwound'
As Ethereum and the rest of the cryptocurrencies are still slowly regaining their momentum, Cuban said stable support levels will allow cryptocurrencies to recover immensely, with the businessman and crypto investor using rocket emojis to suggest that "new money" will lift prices up to astronomical levels.
It gets worse when a Double Tragic Number strikes those who have been in long enough to not think they would ever get hit. When they get hit that means most of the dry powder that was being used to hold support levels is unwound too. Which means it will take new money to 🚀🚀🚀— Mark Cuban (@mcuban) May 23, 2021
Prices of the most traded cryptocurrencies took a steep dive over these recent events, with Bitcoin falling over from $46,000 to $33,000. Dogecoin likewise dropped from a high of 50 US cents to less than 30 cents. Ethereum, on the other hand, slipped from over $3,500 to a price hovering around $2,000.
Mark Cuban: 'Best Platforms Will Do Well Over the Long Term'
Cuban, who owns the Dallas Mavericks and stars in the ABC series "Shark Tank," elaborated on his tweet in an e-mail interview with Newsweek, commenting that "the more utility the platform has the more successful it will be."
Cuban said that at the end of the day, "crypto is all software" and such successful software should have "happy users that can't live without it" and who are "willing to pay enough to keep them vibrant." He added that at the foundation of these cryptocurrencies, just in case the enthusiasts forget, are token holders, validator and miners who "all get rewards".
These rewards, Cuban said, will gain value only when there is enough revenue coming in, hinting that they would give their best efforts at improving the blockchain network for the long term.
"Speculation aside," Cuban noted, "the best platforms will do well over the long term."
Ethereum Price Prediction: Upgrades Will Help
Ethereum and Dogecoin have indicated working on upgrades to their network.
The Ethereum 2.0 upgrade, which is named after the brightest star in the Aquila constellation in the northern hemisphere "Altair," is scheduled to unveil in July or August, as per Coindesk. Its separate 11th backward-incompatible, system-wide upgrade or "hard-fork" upgrade is also scheduled to be released around that time, so users can expect maximum efficiency. This is seen to help the digital token cut its high-transaction costs, lifting ETH price to unprecedented heights.
Dogecoin developers, on the other hand, are also working on improving the meme-based coin's network. Collaborating with Tesla and SpaceX CEO Elon Musk on the Doge 1.21 upgrade that will enhance integration, wallet backups, and synchronization speed in a partnership that Musk described in a tweet as "potentially promising," according to The Ascent.