In Monday (8.1.18) we saw major dips in cryptocurrencies’ prices. Almost every digital currency on top 20 faced a severe drop in value. It turned out that the cause for this phenomenon is CoinMarketCap’s decision to remove South Korean markets from its database.
In Monday (8.1.18) we saw major dips in cryptocurrencies’ prices. Almost every digital currency on top 20 faced a severe drop in value. It turned out that the cause for this phenomenon is CoinMarketCap’s decision to remove South Korean markets from its database. CainMarketCap is arguably the most renowned website providing cryptocurrency price data.
The customers’ demand for digital money in South Korea is significantly higher than anywhere else. Apart from that, there are strict restrictions on cryptocurrency trade and supply. Undoubtedly, these add up to the premium prices in the country. It is well-known for virtual money enthusiasts that cryptocurrencies are being traded at premiums in Korea. Often the prices are much higher compared to exchanges outside the state.
The action made by CoinMarketCap took place around 5 a.m. UTC. Soon after, the total market cap diminished by $35 billion. This move may have caused frustration among investors as many fear-induced sell-offs occurred while prices continued to drop. The whole process stopped at $668.7 billion total market capitalization.
Ripple was one of the cryptocurrencies that faced serious downfalls. It fell from second to third place on CoinMarketCap. Representatives warned Ripple customers to double-check prices at various sources before trading. David Schwartz, Ripple’s chief cryptographer tweeted about the platform’s action, which misleads many customers that prices are falling, causing panic. He further added traders should carefully evaluate the factors instead of fear-induced decisions.
Due to Korean legislation and regulation on financial markets, there is a shortage of tokens within the country that causes prices to rise. Schwartz went one step further and stated that the new prices are more accurate and make sense.
Differences between Korean and non-Korean exchanges are large. For example, at one moment Ripple was traded for $2.43 worldwide, while in South Korea the price was $3.93. The data comes from BitcoinAverage, which monitors hundreds of exchanges for last price, current lowest ask, current highest bid and trading volumes in the last 24h. All these indexes are used to calculate the average price of any token.
CoinMarketCap discussed their decision the exclude South Korean markets on Twitter. They back their actions with arguments that the divergence in prices is extreme. The platform aims to provide customers with the most accurate and relevant data available.
The exclusion of Korean markets caused Bitcoin, Ethereum and Ripple prices fall by 7%, 2%, and 11% respectively. Currently, there are 1.386 cryptocurrencies on CoinMarketCap. The platform obtains its data from 7.556 markets worldwide.