Cryptocurrency values have plummeted by €100billion after an influential website sparked panic by removing South Korean exchange prices from its rates.
Bitcoin was one of the currencies to sink when CoinMarketCap, one of the industry’s most prominent global indexes, carried out the move without any warning, resulting in a steep drop in all virtual coins they track.
The exclusion of data from South Korean exchanges, where virtual currencies trade at a wide premium, sparked confusion and triggered a selloff.
The total market capitalisation of some 1,300 cryptocurrencies tracked by the website then plunged 20 per cent from around $830bn to $669bn, it has been reported.
Cryptocurrency values have plummeted by €100billion after an influential website sparked panic by removing South Korean exchange prices from its rates
The website shows real-time prices and market capitalisations for more than 1,300 cryptocurrencies and is widely followed by market participants.
‘Every crypto is priced at a 30 percent premium in South Korea,’ said Greg Dwyer, head of business development at cryptocurrency derivatives exchange BitMex.
‘By removing that, it looks like the market cap fell by 30 percent and so people rushed to sell because they’re not sure what’s happening.’
As of midday in New York on Monday, bitcoin was last down 7.1 per cent, at $14,980 on the Luxembourg-based Bitstamp exchange. It fell to a one-week low below $14,000.
Analysts said bitcoin was also undermined by news earlier in the session that South Korean financial authorities were inspecting six local banks that offer virtual currency accounts to institutions.
Market participants said CoinMarketCap removed data without any explanation from three of the largest South Korean exchanges: Bithumb, Coinone, and Korbit.
CoinMarketCap was not immediately available to comment on its move.
But in a tweet yesterday, it said: ‘We excluded some Korean exchanges in price calculations due to the extreme divergence in prices from the rest of the world and limited arbitrage opportunity. We are working on better tools to provide users with the averages that are most relevant to them.’
Bitcoin was one of the currencies to sink when CoinMarketCap, one of the industry’s most prominent global indexes, carried out the move without any warning, resulting in a steep drop in all virtual coins they track
Cryptocurrency prices tend to be much higher on South Korean exchanges because of huge demand and monetary restrictions in that country, analysts said.
‘South Korea has always had a premium because it’s very difficult to get cash out of the country,’ said Dwyer.
‘Anyone looking to take advantage of an arbitrage in South Korea needs to do it with fiat currencies.’
Ripple’s currency XRP fell more than 30 per cent on the day, after hitting an all-time peak of around $3.84. In 2017, XRP soared 35,000 per cent, surpassing bitcoin’s surge of around 1,500 per cent.
Traders said XRP was the most severely affected by CoinMarketCap’s removal of South Korean prices because it was trading at a 50 per cent premium in that country.
Ripple is a U.S.-based provider of blockchain-based banking payments and it created XRP to facilitate cross-border payments and institutional settlement in seconds.