THE value of global cryptocurrencies plummeted after an influential index removed prices from the South Korean exchanges without warning.
Prices on Seoul’s financial exchanges for virtual currencies like Bitcoin are typically up to 30 per cent higher than in other countries.
However, CoinMarketCap – arguably the industry’s most prominent global index – triggered anxiety and anger when it suddenly removed a group of Korean exchanges from its price calculations.
The widely used research site’s decision to exclude average price data from Bithumb, Coinone and Korbit resulted in a sudden drop in displayed prices.
That caused confusion among investors and partly contributed to a major sell-off, also fuelled by news that South Korean and Chinese regulators planned to increase monitoring of trading and mining.
“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 wrote on Twitter.
“We are working on better tools to provide users with the averages that are most relevant to them.”
The total market capitalisation of more than 1,300 cryptocurrencies tracked by Coinmarketcap fell from around $830bn to bottom out at $669bn – a drop of 20 per cent.
Among the hardest hit were Ripple, Litecoin and Bitcoin cash, which at the time of writing were down 25 per cent, 11 per cent and 13 per cent respectively on the previous day, while Bitcoin was trading at $US15,215 ($A19,364), down more than seven per cent.
“The most obvious point is how undeveloped the ecosystem supporting bitcoin and cryptocurrency trading still is,” said ABC Bullion chief economist Jordan Eliseo.
“It highlights the undeveloped nature of trading in Bitcoin, reporting in Bitcoin, market data sources for people to utilise when they’re wanting to track performance or monitor trends in that space.
This article was curated from Google News. You can read the original article here.