CoinMarketCap, the global crypto price indicator, removed South Korean exchange data from its price index in a swift, unannounced move. This change — already unpopular — was made in response to wide cryptocurrency price discrepancies between South Korea and the West.
In their official explanation of the move, CoinmarketCap tweeted:
“This morning 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.”
South Korea at the Center Again
CoinMarketCap’s decision came following South Korean officials’ on-site inspections of several notable domestic banks. The inspections were part of an anti-money laundering investigation pertaining to cryptocurrencies. Jordan Eliseo, ABC Bullion Chief Economist, noted:
“The regulatory noise in South Korea and China, that’s going to be an ongoing threat to bitcoin and to crypto more generally for the foreseeable future.”
Whether right or wrong, then, perhaps it’s “get some while you still can” FOMO (“fear on missing out”) that’s been pushing bitcoin and ether prices significantly higher in South Korea than in Europe and North America as of late.
And it’s that dynamic that’s been pushing cryptocurrency prices much higher on CoinMarketCap than users actually have access to in the West.
But crypto enthusiasts were indignant over how CoinMarketCap handled the shift. The change was not made public until Monday at noon, even though the alteration took place on Sunday midnight U.S. EST.
Accordingly, for now the global index source has ruled out the leading three South Korean crypto exchanges, which are Bithumb, Coinone, and Korbit. Generally, crypto prices on these exchanges are 30 percent higher than the average prices in other countries.
Ripple Chief Cryptographer Agrees
CoinMarketCap’s step to provide more accurate prices for Westerners made it appear that the prices of XRP, Bitcoin Cash, and Litecoin plummeted instantly by 26 percent, 18 percent, and 12 percent respectively.
David Schwartz, Chief Cryptographer at Ripple, responded:
“[South Korean exchanges] are outliers due to a shortage of cryptos in Korea and difficulty getting KRW out. The new price is more accurate and meaningful, IMO.”
CoinMarketCap Poofs $100 Billion
According to CoinMarketCap, over $100 billion USD of the overall crypto market was expunged in 24 hours. Before the alteration, the total crypto valuation was at $835 billion, whereas after the change it dropped to $686 billion.
Japan and South Korea have seen booming cryptocurrency trading markets recently, especially after China suppressed crypto exchanges last year. On the contrary, Japan has legalized bitcoin as a mode of payment and set clear regulations for trading the bellwether cryptocurrency.
The aforementioned Eliseo thinks CoinMarketCap’s decision belies the prematurity of the ecosystem in general:
“It highlights the undeveloped nature of trading in bitcoin, reporting in bitcoin, market data sources for people to utilize when they’re wanting to track performance or monitor trends in that space.”
Is CoinMarketCaps decision to exclude South Korean Exchanges good, or bad, or ultimately inconsequential for the crypto markets?
Images via CoinMarketCap, Medium