Highly popular cryptocurrency price tracker CoinMarketCap removed several South Korean exchanges from its listings on Jan. 8, causing a dip in the overall market that particularly affected altcoin Ripple (XRP).
CoinMarketCap, which uses data from multiple major global exchanges to produce averaged prices for cryptocurrencies, tweeted Monday about their decision to remove the exchanges, saying that it was due to “the extreme divergence in prices from the rest of the world and limited arbitrage opportunity.”
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.
The Ripple Effect
CoinMarketCap’s decision was followed by a dramatic reverse in Ripple’s record-breaking uptrend. The day CoinMarketCap removed the South Korean exchanges, Ripple saw an immediate loss of over $20 bln in market capitalization, and an almost 30 percent price drop Jan. 8. The altcoin was overtaken by Ethereum (ETH) as the second largest cryptocurrency by market cap.
Prices on South Korean exchanges are also over a dollar higher than on most other exchanges globally, which is part of what prompted CoinMarketCap to exclude them.
Rumors that Coinbase would add the altcoin, followed by confirmation on Jan. 4 that it would not, caused a peak and drop in Ripple’s price in the first few days of January. However the price drop after CoinMarketCap’s Jan. 8 decision had a more immediate and drastic effect, with an over 16 percent drop in the space of 6 minutes.
Coinmarketcap’s decision to exclude Korean prices from the displayed XRP price made the price appear to drop, likely triggering some panic selling. Look closely at the data and don’t be mislead.
On Jan. 7 local media in South Korea reported that authorities will inspect six of the country’s major banks to probe for money laundering via cryptocurrency.