Over the past few years, the cryptocurrency industry has seen its fair share of crashes. Even the market's most successful and popular coins have suffered major price drops multiple times, including Bitcoin and Ethereum, the world's second-most valuable crypto. But what would happen if Ethereum lost the entirety of its value and dropped to zero? How would this affect the industry and investors?
Ethereum's Price History
Like most other coins and tokens in the crypto game, Ethereum's price has fluctuated significantly since its initial release in July 2015. Throughout the first few years of its existence, Ethereum's price remained low, sitting at an average of around ten dollars. Then, in the first quarter of 2017, things began to change. Ethereum's price started climbing steadily and then shot up to over $300 in June of the same year.
Ethereum's price then remained in the low hundreds until early 2018, when it surpassed $1,000 for the first time. It wasn't until the crypto boom of early 2021 that Ethereum hit multiple thousands in price.
Ethereum peaked in November 2021, when the market was doing very well. At this point, Ethereum was worth an impressive $4,700. But this high didn't last long, as is often the case with crypto. Over the next few months, Ethereum's price began to decline, though it still experienced a few spikes here and there.
It wasn't until May 2022 that Ethereum's price really began to suffer. Along with the rest of the market, Ethereum's price took a severe downturn. This crash caused huge financial losses to investors, and, at the time of writing, Ethereum still has not recovered. Even Bitcoin took a major hit during this crash, losing a huge chunk of its value.
During major crashes, as discussed above, many wonder just how bad things can get. Will Ethereum reach just a few dollars, or worse, will it hit zero? While these are common questions, it's important to consider the reality of the situation first. So, can Ethereum even hit zero?
Can Ethereum Crash to Zero?
Many experts have shared their views on just how low Ethereum can realistically get, but few have gone so far as to predict a crash to zero.
It's important to note here that Ethereum losing the entirety of its value is highly unlikely, and the same goes for other popular coins like Bitcoin. We've seen many smaller coins drop to zero, especially those with a very short history in the market. And while price drops are by no means unusual for the market's most popular assets, hitting zero is another thing entirely. Such an event would require huge changes to take place within the industry.
In order for a major cryptocurrency to drop to nothing in value, it would essentially have to be outlawed on a global scale and de-listed from all exchanges. This would stop the currency from being traded legally, which would have a catastrophic effect on its price.
Even then, those who truly believe in Ethereum may still hold onto their holdings in this scenario, allowing the coin to maintain some of its value, even if it is minimal. The cryptocurrency market has amassed a large number of incredibly loyal followers over the past decade or so, with many believing that crypto is the future. So, illegalizing cryptocurrency may not be enough to dissuade these enthusiasts.
It's also worth remembering here that it would be extremely hard to dismantle and destroy a network as significant as Ethereum. After all, Ethereum's blockchain isn't solely used for processing transactions, as is the case for Bitcoin. Rather, the Ethereum blockchain is currently the most popular in the world for developing decentralized apps (DApps), tokens, and NFTs.
ETH is the Ethereum blockchain's currency with which users can pay fees, use app features, mint artworks, and more, giving Ethereum a purpose beyond simple store-of-value. It stands as a crucial part of the Ethereum network as a whole. This alone would make it very difficult for Ethereum to drop to zero, as all the developers who rely on this blockchain would have to turn their backs on it entirely.
In short, the factors discussed above make the total loss of Ethereum's value improbable but not impossible. So, let's delve into what would happen if Ethereum somehow crashed to zero.
What Would Happen if Ethereum Crashed to Zero?
There's no denying that a total Ethereum crash would be catastrophic for investors and developers. Firstly, any individual with Ethereum holdings would suffer a financial loss, regardless of how much they'd invested in the coin. Additionally, anyone who had staked Ethereum in any capacity would also lose any chance of making a profit.
This kind of crash would also have a hugely negative effect on the many crypto validators on the Ethereum blockchain. These individuals, also known as nodes, are responsible for verifying Ethereum transactions and maintaining the transparency and immutability of the network. Validators are paid in ETH, so if its value drops to nothing, they would no longer have any incentive to continue securing the blockchain.
If Ethereum loses its validators, the network would no longer be able to function, which would essentially spell the end of this currency and the blockchain it exists on. Of course, this would affect all who have built and developed decentralized apps on the Ethereum blockchain. So, everything that had been built within the network would cease to operate or have value.
Take Ethereum's long list of supported tokens, for example. If the Ethereum blockchain could no longer function, the prices of these tokens would also take a huge blow, which would affect another huge swathe of investors. On top of this, popular DeFi services like MakerDAO, Uniswap, and Aave, would cease to operate, too.
In terms of NFTs, a total crash of Ethereum would also be very bad news. This is because the majority of NFTs out there are priced in ETH (as they're minted on the Ethereum blockchain). Take Opensea, for example. This hugely popular NFT marketplace prices most of its hosted NFTs in ETH. So, if Ethereum's price dropped to zero, all the Ethereum-priced NFTs on this marketplace would instantly become worthless.
A Total Ethereum Crash Would Be Truly Catastrophic
Because Ethereum's influence on the cryptocurrency market is so large, there's no doubt that if it was to lose the entirety of its value, a huge number of people would suffer to some degree. However, such an event is currently highly unlikely, so even if Ethereum drops to a low number, this is likely not indicative of a total crash. In fact, Ethereum will probably continue to have a solid foothold in the industry for the foreseeable future.