It’s Jan 11, 2018, and my inbox is full of messages regarding the unexpected surge of the Ethereum Platform and token (ETH) and the sudden drop of most altcoins during the same period. Let’s take things from the beginning and see what really happened here.
For starters, you should already know as we mentioned before that having market drops of 15-35% is absolutely natural and healthy. Therefore that was not a solid case this time since the iconic drop was based on various factors we will try to analyze in depth.
CoinMarketCap, arguably the most prominent global index of cryptocurrency prices, triggered a wave of anxiety and anger a couple days ago when it removed a group of Korean cryptocurrency exchanges from its price average price pool of markets.
Though the change was apparently made at midnight Sunday (January 7th) U.S. EST, CoinMarketCap did not publicize it until midday on Monday, saying that the Korean exchanges showed “extreme divergence in prices from the rest of the world and limited arbitrage opportunity.”
People naturally panicked and started to sell in order to cut their losses resulting in a significant drop in CoinMarketCap’s measurement of most cryptocurrencies. That respectively created the illusion that a broad market decline was just around the corner. As news of the cause of the sudden drop spread this Monday, most prices began recovering instantly.
Now, what most people forget is that more than half of the platforms are using the Ethereum Network for transactions. In fact, Ethereum’s daily number of transactions surpasses more than half of the transactions made by all the other platforms combined, including Bitcoin. Some still believe that Bitcoin’s price affects other coins, but that is not the case since Bitcoin itself will start implementing Lightening Network due to its failure to manage even its own transactions fast and cheap. While rumors want a decent amount of tokens including KIN, changing their platform from Ethereum into the Stellar (XLM) Network.
So what really happened these days in a nutshell?
CMC removes Korean markets due to an ongoing investigation related to Korean arbitrage opportunities – Prices seem to drop – People panic and sell, and by “selling” we mean that whatever altcoins they are trying to get out of, they have to translate into Ethereum first – Ethereum price starts to rise significantly attracting new and old investors due to FOMO (Fear Of Missing Out) – Ethereum sees an overall uprise equivalent to +35% which was then more than enough for people to start selling it again in order to purchase their initial tokens that would now cost half or even a third of the price compared to last week.
Concluding, the Korean markets shall soon return to CMC’s market pool, with more logical prices compared to the average global market this time, boosting again the top 100 from 10% to 25% in a single day. Ethereum will be stabilized for the time being, while altcoins will fully recover and start moving in violent spatial changes once again.
A short review of the CMC history can tell us that we generated a $400bn market during the last 9 years, then doubled that market in the past couple months alone. Considering the high demand for new accounts that caused major markets including Binance, that recently reached an astonishing 5 million user pool, Bitfinex, and Bittrex to suspend new account creation, we can be almost certain that we are going to see a multi-trillion market cap in the crypto sphere this year.
Mass adoption is coming with 3d and 4th generation blockchain platforms that are now focusing on real-life use cases, governmental contracts and global problem solutions, instead of trying to convince you buying “thin air”.
People think that it’s too late to invest in blockchain focusing their views on the Bitcoin price. We believe that this is only the beginning of a new era of technological advancement where positive sciences, health, industrial and socio-economical sectors will experience massive boosts adopting this remarkable technology.
Ross Peili for The Independent Republic