There’s more crypto destruction waiting: Blockchain.com CEO

For cryptocurrency investors who experienced their first bout of cryptocurrency in recent weeks – witnessing not only major bitcoin declines, but crashes in stack coins, the collapse of Luna, Terra and the fall from grace of Terraform Labs founder Do Kwon – get used to it , according to Blockchain.com CEO Peter Smith.

More pain is coming, says Smith, more risk will be exposed, but in the end it is a good thing for the decentralized economy.

For the crypto investor, he says that the lesson from recent weeks should be back to the crypto equivalent of the traditional dollar cost average market investment concept – slowly build a position in an asset over time so that all your money is not exposed to every single bout of volatility.

“Average into the slow,” Smith told CNBC’s “Worldwide Exchange.”

Bitcoin reached its lowest level since December 2020 earlier this week, below $ 26,000, and shares of listed cryptocurrency broker Coinbase were down as much as 74% so far this year,

“And you have to be prepared to hold it for a while,” Smith added. “Because we are still in the early stages of expanding this entire financial system.”

Blockchain.com, one of the more established players in the area, founded in 2011, ranked No. 7 on this year’s CNBC Disruptor 50 list.

Lately, investors have not been patient, with institutions that had accumulated in crypto, pulling out in droves, taking off with significant gains, and letting many novice retail investors hold their own, a classic result in a market bubble.

“What’s happening in the market is a washout of risk and influence across the entire global market system, and we’ve certainly felt it in crypto, especially in recent weeks,” Smith said. “I have said for a long time that this is going to be a long process of adoption and growth.”

This process will include more destruction in the short term as weaker links in the crypto-economy are wiped out.

“What you need to see is consolidation in the market itself as well as the companies that serve the market,” Smith said.

He tweeted recently about “creative destruction” that makes the crypto industry stronger in the long run, and told CNBC: “There are many companies and protocols and assets where we need the process of creative destruction to get through the market.”

“I expect that in the next few weeks after this truly dramatic downturn in the market, some of the risks will begin to be exposed through the economy,” Smith said.

This will mean that the companies, trading companies and funds that have not handled the risk in the right way will be closed.

“It’s going to take a few weeks, if not months, to see the ripple effect of really brutal two or three weeks for crypto,” he added.

Smith remained crypto, telling CNBC as someone who is now witnessing their “fourth or fifth” market cycle in the volatile fintech sector, that “every single time there has been brutal pain on the way in, but led to a stronger industry and more useful industry, and real fundamental growth over the next two to three years that follow. “

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