Bitcoin, Ethereum and other major cryptocurrencies trended higher this week after researchers reported bullish price data.
Bitcoin price climbed to over $21,000 from under $19,000 last week, while Ethereum price rose above $1,200.
Now, as many bitcoin and ethereum investors reaffirm their commitment, crypto billionaire Sam Bankman-Fried has warned that “a substantial fraction” of cryptocurrencies are “empty commodities” with “real crash potential“.
“When you have something that is basically an empty commodity, which is true of some places and assets in crypto, that’s something that definitely has real crash potential.“, Sam Bankman-Fried told CNN.
“In terms of market capitalization or volume, a fairly small fraction of the crypto ecosystem represents this; however, in terms of the number of assets, it is a substantial fraction.”
There are currently just over 20,000 separate cryptocurrencies listed on Coingecko, with bitcoin and ethereum contributing the majority of market value.
“The general pattern is one of a long tail of assets that has very little use and is mostly just speculation“, said Sam Bankman-Fried, adding that there is “that deeper core that has a lot more use” and “at least a reasonable sense of actual future use“.
Sam Bankman-Fried was also asked about a recent Bloomberg interview where he seemed to suggest that many crypto projects are similar to Ponzi schemes that only provide value through new users putting money in.
“What I was pointing at was how a lot of this stuff is basically pure economic speculation with no real use case potential“, Sam Bankman-Fried. “It’s not always obvious which is which. We can do what we can to try to distinguish them and offer assets that are healthy for the ecosystem, but we won’t be perfect for that, nobody will be.”
The latest bitcoin, ethereum and crypto price crash has wiped roughly $2 trillion from the combined cryptocurrency market and caused turmoil for many cryptocurrency companies that have struggled to sustain their operations.
Crypto lenders, such as Celsius and BlockFi, have been forced to suspend or limit user withdrawals, while some investment firms have declared bankruptcy.