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KyberNetwork: thoughts on the price movements and future of cryptocurrency market

The Outlook

Investors of crypto-assets are easily affected by movements of crypto-assets’ prices. Typically, one cheers when the price soars, and laments when the price plummets. Earlier last week, the prices of Bitcoin and Ether have slipped to US$1,863 and US$136 respectively, a decline of approximately 26% and 43% from the week’s high of US$2,535 and US$242. Due to the drop in prices, the cumulative market capitalization of all blockchain companies fell to less than US$70 billion at its lowest, down from US$115 billion from a month ago. That being said, if one bothered to ask around, one would learn that most investors are still bullish about the prospects of Bitcoin, Ethereum and blockchain in general. So why the significant drop in prices?

The Rise

Before we examine the possible explanations for the price drop, let’s review what happened in the blockchain space earlier this year, particularly in regards to Ethereum and other decentralized applications (dapps) that are built on top of the Ethereum protocol. Ethereum price started gaining momentum back in March, when the Ethereum Enterprise Alliance (EEA) was introduced. Towards the end of the month, Ether was already approaching US$50. The price of Ether continued to increase thereafter, but saw its major breakthrough in late May, during which a series of ICOs such as and BAT were announced. By then, the price of Ether had already shot past US$150, and the price was propelled further upwards by the advent of several other notable projects, closing in at around US$400 briefly in mid-June.

While the sensational increase in the prices of major blockchains in the first half of 2017 might have happened sooner than many had expected, it was not uncalled for. The price increase is an indication of the community’s acceptance of Ethereum as a blockchain protocol, and a recognition of Ethereum’s versatility to accommodate many different types of dapps. As more Ethereum dapps and ...

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