Earlier today, on January 21, the cryptocurrency market has experienced a minor correction as nearly all of the cryptocurrencies including Ripple and Cardano in the market declined in value.
While major cryptocurrencies including bitcoin and Ethereum dropped by a relatively small margin, Ripple and Cardano dropped by around 10 percent. Since a major correction occured last week, the market cap of Ripple has struggled to recover beyond $80 billion.
At its peak, Ripple’s market valuation neared $150 billion, easily surpassing Ethereum to become the second largest cryptocurrency behind bitcoin. However, since the correction, Ripple has endured a week-long slump.
Cardano, which peaked at $32 billion on January 3, has failed to rebound over $20 billion over the past week, struggling to achieve half of the market valuation of Bitcoin Cash.
Several analysts have attributed the recent minor correction of the cryptocurrency market to the South Korean cryptocurrency market, and the decision of major cryptocurrency exchanges to prohibit foreigners from trading cryptocurrencies.
This week, as CCN.com previously reported, South Korea’s third largest cryptocurrency exchange Korbit told its users that foreigners will no longer be able to deposit or withdraw Korean won on local cryptocurrency exchanges once a new anti-money laundering (AML) system is integrated by the end of January. The Korbit team wrote:
“Please note, however, that non-Korean nationals, both resident and non-resident, will not be allowed to deposit KRW at any domestic cryptocurrency exchanges when the new KRW deposit method is implemented. We will explain further via a separate message. In order to comply with the identification and anti-money laundering regulations being enforced by the government, the current KRW deposit method will be terminated by the end of January 2018.”
It is difficult to measure the impact of the foreigner cryptocurrency trading ban initiated by the South Korean government on the global cryptocurrency market given that the majority of cryptocurrency investors and traders in the South Korean market are the country’s citizens.
Thus, it is far-fetched to claim that the prohibition of foreigners from trading cryptocurrencies in the local market caused the global cryptocurrency market to experience a minor correction. More to that, the government has stated since December 14 of last year that foreigners will not be able to trade cryptocurrencies in the local market.
Currently, the South Korean cryptocurrency market has disabled local investors from opening new accounts. Only investors that have opened accounts prior to January 2018 are able to trade. By the end of January, cryptocurrency exchanges in South Korea will begin accepting new users and opening accounts for investors.
It is likely that by the end of this month, within the next two weeks, a wave of investors from the traditional finance market will invest in the local cryptocurrency exchange market, causing volumes to spike and the value of cryptocurrencies to increase.
In the short-term, within the next few days, the cryptocurrency market could continue to slump considering that historically, cryptocurrencies have tended to perform poorly in the beginning of the year, due to the Chinese new year.
During the Chinese new year celebrated by China and South Korea, the majority of people in the two countries send money overseas or domestically, withdrawing money from their bank accounts and cryptocurrency holdings.
Featured image from Shutterstock.
Last modified: March 4, 2021 5:03 PM