Cryptocurrencies were off to a good start this week before a recalibration in CoinMarketCap’s price calculations threw the market into a state of upheaval. In an instant, virtually all cryptos across the board turned red as price adjustments spooked investors globally.
CoinMarketCap’s crypto valuations have always been slightly higher than other venues and calculations. However, its apparent influence on the broader market was on full display Monday after South Korean exchanges were summarily dropped from all price calculations. The resulting disparity caused Bitcoin, Ethereum, Ripple, and all other cryptos to drop in value in a perceived sell off.
Consequently, the quick turnabout helped drag down the rest of cryptos globally on all exchanges. For example, at the time of writing, Bitcoin is down over 11.0 percent, with Ethereum also plunging off a recent high of $1227.0.
According to CoinMarketCap, cryptos are in the red by as much as -27.4 percent (Ripple), though this decline is not nearly as robust, with more normalized estimates of Ripple being approximately -14.4 percent at the time of writing. The reason for the disparity in the decline in prices is similar in nature to its inflation of prices in the first place on CoinMarketCap.
In any scenario, the removal of South Korean rates without any prior notice or at this moment explanation from CoinMarketCap has roiled crypto prices. This came to a head with Ripple prices in particular, as South Korean exchanges account for a significant proportion of Ripple trades in recent months.
The decision of CoinMarketCap to abruptly remove South Korean rates is highly controversial given that it includes not just Ripple but other cryptocurrencies such as Bitcoin and Ethereum, among others. All cryptocurrencies with a large concentration of trading in South Korea have subsequently seen the largest losses, in every case instantaneously.
This was seen by the broader public and traders as a sell-off, which when misinterpreted caused panic in the markets. The move could ultimately foster a healthier trading environment due to regulations, though in the interim, it appears the knee-jerk reaction is one of panic and bearishness.
Finance Magnates will update the story as it continues to develop.