Ripple price crash
Ripple price fell by 11 percent on Sunday, touched $1.86 on Monday morning and soon slipped to as low as $1.70 at 8:30 am. The journey has been quite shaky! The previous week saw Ripple price rally and this week opened with an all-time low price. Here’s the whole story.
Ripple price drop
Earlier this week, Ripple’s XRP claimed second place in cryptocurrency charts with a market capitalization of more than $123 billion. The rally soon turned down as the price chart showed downward trajectory. Monday morning marked January low of $1.70 which was about 55 percent of January high $3.84. Such price drops in one cryptocurrency, make way for other players to take over. Some analysts believe that this is an opportunity for the rival Ethereum to take over the second position after Bitcoin.
Reasons behind ripple price crash
David Schwartz, the chief cryptographer at Ripple says it is the exclusion of Korean prices from the “displayed XRP price” that is triggering panic amongst the traders.
“For those asking us about the recent price fluctuation, @coinmarketcap has excluded Korean exchanges from their pricing averages.This change applies to all of their listed digital assets, not just $XRP.” – Ripple tweeted.
Schwartz believes that probably it is the Coin Market Caps decision of excluding inflated South Korean prices, that’s giving Ripple Price, an appearance of a sudden drop. Therefore, he suggests XRP enthusiasts to “look closely at the data” and not simply be mislead by the estimates.
“CoinMarketCap's decision to exclude Korean prices from the displayed XRP price made the price appear to drop, likely triggering some panic selling. Look closely at the data and don't be mislead.”- Schwartz tweeted.
“Prices definitely started falling after CMC made the change. My guess is that the appearance of a sudden drop triggered panic selling and profit-taking. But that's a guess.”- he further added.
Greg Dwyer, head of business development at BitMex also seems to be on the same page as Schwartz. He argues that people aren’t really aware of the actual picture. They simp;y rushed to sell Ripple in response to fall in market cap.
“Every crypto is priced at a 30 percent premium in South Korea. By removing that, it looks like the market cap fell by 30 percent and so people rushed to sell because they're not sure what's happening."- Dwyer
Other analysts argued that it is the uncanny performance of the Ripple that made it hit such low price. Marius Rupsys, Digital asset harder believes that Ripple isn’t “driven by fundamentals” and therefore, its sustenance in the market is questionable:
"Projects that got high valuations, like Ripple (10x in a month) can't sustain this growth as it is not driven by fundamentals, but rather speculation.”
Coin Market Cap’s response
Regarding exclusion of Korean inflated prices, Coin Market Cap argued that there were huge differences between Korean prices and those of the rest of the world. Therefore, they made changes in the price calculations so as to provide more relevant averages to the users.
“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.We are working on better tools to provide users with the averages that are most relevant to them.” - Coin Market Cap tweeted.