Most cryptocurrency enthusiasts are well aware of how the prices on Coinmarketcap look skewed. This is mainly because they continue to factor in the Korean prices for the global average. Although that is only normal, it also makes the markets look a lot healthier than they really are. As a result, the platform is now no longer including the Korean prices for all currencies. The trading volume still counts though, which is only normal.
COINMARKETCAP MAKES A MUCH NEEDED CHANGE
For the past few months, all cryptocurrencies have seen their market caps go up quite spectacularly. In a lot of cases, the individual prices per currency or token were nowhere even near what people can fetch for it on the exchanges. That is mainly due to the involvement of South Korean exchanges. Mainly Bithumb, but also Korbit, Coinone, and a few others. All of these trading platforms artificially inflate prices and market caps as they trade at a very steep premium over the rest of the world.
As a result, we saw Bitcoin’s price reported at over $18,000 for quite some time, even though the Western world only came close to that level on one occasion. Right now, the same Bitcoin price is listed on Coinmarketcap at a value of $15,464 which is slightly more realistic. It does represent a massive 5% decline compared to 24 hours, but that’s just the adjustment due to Korean prices being excluded on CMC.
For those unaware, one Bitcoin is valued at over $23,000 in South Korea right now. That same Bitcoin, when exchanged for US Dollars, will get you $15,774 at best. It is evident this discrepancy between exchanges has been a problem for quite some time now. There is no solution other than to exclude the Korean exchange prices for the foreseeable future. It is not the first time we see Asian trading platforms trade major cryptocurrencies at a much higher value compared to the rest of the world either, mind you.
About a year ago, the Chinese cryptocurrencies dominated the trading volume for Bitcoin and most altcoins. At that time, Chinese traders were also paying a premium for every coin, although it rarely exceeded 10%. In South Korea, that premium is now close to 50%, which is absolutely unacceptable. No one can take advantage of these arbitrage opportunities either, thus the prices will not be driven down in the near future. Using Korean exchanges is subject to very strict rules and requirements, which makes it unattractive to Western users.
As a result, all cryptocurrencies that rely on Korean exchanges for their prices have taken a big hit in terms of price and market cap. This change was to be expected though, as Coinmarketcap now shows the “proper” averages for all currencies again. Although there will always be some discrepancies when looking at altcoin trading markets and Bitcoin, the average price should now be much closer to the real value one could buy or sell said currencies for. Since no one can take advantage of the Korean premium anyway, this change doesn’t matter all that much when looking at the bigger picture.
The big question is how this will affect cryptocurrencies moving forward. More specifically, things are not looking all that great on the charts less than 24 hours after this change was introduced. Nearly everything is in the red, except for a few unicorns. Moreover, the overall cryptocurrency market cap saw nearly $50bn removed from its total, which is quite a lot of money. Things can only get better from here on out, though, that much is rather evident.
Source: The Merkle