Ripple’s signature token, XRP, has fallen 55 per cent from its record high of £2.84 ($3.84) on Thursday to £1.28 ($1.73) at 11am GMT today, according
XRP opened at £2.48 ($3.36) on Monday but was dealt a crippling that day when its market cap and price were sent on a downward trajectory.
The new crypto contender had second place in the charts with a staggering market capitalisation of more than £90billion ($123billion) at 4.30am GMT on Monday.
But the Ripple market cap had hit a January low of more than £48billion ($65billion) by 8.34am GMT. Ethereum has overtaken as the second biggest cryptocurrency.
CoinMarketCap’s exclusion of data from South Korean exchanges, where virtual currencies trade at a wide premium, sparked confusion and a broad selloff.
“Every crypto is priced at a 30 percent premium in South Korea,” said Greg Dwyer, head of business development at cryptocurrency derivatives exchange BitMex.
“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.”
Why are Ripple’s prices crashing?
The sudden collapse in Ripple prices came as a surprise to investors who jumped the crypto bandwagon after XRP skyrocketed an incredible 35,000 percent in 2017.
Unlike its main competitor bitcoin, Ripple has the backing and support of financial institutions like the Bank of America and Santander, who have adopted the money transfer system.
But Erik Vorhees, CEO of cryptocurrency exchange ShapeShift, argued that this drove the cryptocurrency into a speculative bubble of its own making.
The finance expert accused Ripple of boosting its allure on the markets by exploiting the backing it has received from big banks.
Ripple prices: The XRP token took a hit to its market capitalisation at the start of the week
The technology behind Ripple is aimed at banks as a faster and more secure alternative to money transfer systems such as SWIFT.
However, some crypto experts have argued this sort of centralisation with banks is antithetical to the decentralised and unregulated nature of cryptocurrencies.
This leads to another possible reason why Ripple and other major crypto tokens took a hit this month – crypto regulation in South Korea.
Investors such as Gabor Gurbacs, at VanEck Associates Corp, argued that any rumour of regulation in East Asia heavily reverberates through the markets.
Ripple CEO wants to change how money moves globally
News on the regulatory front is dragging down cryptos
South Korea’s financial regulators, the Financial Services Commission (FSC) and Financial Supervisory Service (FSS), recently announced a joint effort to investigate six local banks that offer virtual currencies as part of their offer.
But the appetite for cryptos is not waning in Korea and Ripple prices surged as high as £2.96 ($4) on some exchanges – higher than its Western counterparts.
Ripple prices: XRP is trading higher on South Korean exchanges
Ripple prices were considerably higher on Tuesday on LiveCoinWatch, which tracks South Korean exchanges Bithumb and Coinone.
Naeem Aslam, chief market analyst at TF Global Markets, argued that regulators need to focus on this market to find a solution to the price discrepancies between exchanges.
He said: “We need regulators to look into the space more closely, the Korean exchanges have become crazy in terms of price differences so these regulatory actions would help the price stability.”