CoinMarketCap: Removal Of Korean Markets Causes Drop In Cryptocurrency Prices

CoinMarketCap, a popular source for data regarding cryptocurrency markets, caused controversy Monday when it announced that it would be excluding South Korean exchanges from its price average calculations.

The originally unannounced and unexplained decision—which removed data from Bithumb, Coinone and Korbit from the CoinMarketCap average—caused significant movement in the markets as it suggested cryptocurrencies were experiencing a near-universal decline.

CoinMarketCap made the change early Monday morning. As a result, the market capitalization—a measure of the amount of Fiat money such invested into a cryptocurrency—for a number of digital tokens shrank without warning.

The perceived value of cryptocurrencies shifted significantly and led to some panicked responses from those worried about the sudden change. “[CoinMarketCap] has always done whatever they like and never inform the public of major site changes,” one user said on the Cryptocurrency community on Reddit. “They can eat shit.”

“Thanks for sending millions of people into a useless blind panic,” another user wrote .

A number of users within the community pointed out that the change in price and market cap as reflected by CoinMarketCap likely drove to action those with automated systems set up to buy or sell at certain price markers, resulting in additional fluctuations as human traders responded to the sudden action.

CoinMarketCap did eventually publicly disclose around 1:00 p.m. ET—nearly 12 hours after the change appeared to take place—why it decided to exclude Korean markets from its calculations.

“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,” CoinMarketCap explained in a tweet. “We are working on better tools to provide users with the averages that are most relevant to them.”

While the originally unannounced decision caused some panic within the cryptocurrency community, there are plenty of people who believe the change is for the best in the long term despite the short-term shifts.

David Schwartz, the chief cryptographer for Ripple, tweeted in support of the move stating Korean markets “are outliers due to a shortage of cryptos in Korea,” and said the new prices on CoinMarketCap are “more accurate and meaningful.”

Were anyone to have reason to complain about the change made by CoinMarketCap, it would be Ripple. The cryptocurrency appeared to take the largest hit from the exclusion of Korean markets in the calculations. The coin experienced a 30 percent drop in value and lost $20 billion of its market cap in an instant.

A number of users in the Reddit community for Cryptocurrency agreed with Schwartz’ assessment, with several suggesting that the Korean markets inflated the value of cryptocurrencies and led to misleading market caps and prices.