Bitcoin sinks as website suddenly eliminates South Korean exchange rates from estimations

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Bitcoin has sunk after website CoinMarketCap removed prices from South Korean exchanges from its calculations of digital currency rates without any warning, resulting in a steep drop in all virtual coins they track.

CoinMarketCap shows real-time prices and market capitalisations for more than 1,300 cryptocurrencies and is widely followed by market participants. The exclusion of data from South Korean exchanges, where virtual currencies trade at a wide premium, sowed confusion and triggered a broad selloff.

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“Every crypto is priced at a 30 per cent 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 per cent and so people rushed to sell because they’re not sure what’s happening.

At 10:30am, bitcxoin is fetching at $US14,930 on the Luxembourg-based Bitstamp exchange. It fell to a one-week low below $US14,000.

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.

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CoinMarketCap was not immediately available to comment on its move.

Bitcoin / Bitcoins. Generic. Photo by?Steve Heap. Stack of bitcoins with gold background with a single coin facing the ...
Bitcoin / Bitcoins. Generic. Photo by?Steve Heap. Stack of bitcoins with gold background with a single coin facing the camera in sharp focus with shading on the icon letter B on the face of the bit coin. Stock photo ID: 616226957 Photo: Shutterstock

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 $US3.84. 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 US-based provider of blockchain-based banking payments and it created XRP to facilitate cross-border payments and institutional settlement in seconds.

Reuters