Cryptocurrency Market crashes after excluding South Korean Exchange Data

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But a cryptocurrency analyst said he was "sceptical" that the justice ministry' proposal would go into force because of strong market resistance.

The clampdown in South Korea is believed to be in response to decisions made by global policymakers, who have struggled to regulate the slew of new virtual currencies, including Bitcoin and Ripple.

But the MSF disagreed, saying, "We do not share the same views as the Ministry of Justice on a potential cryptocurrency exchange ban".

The effect of the change in the prices of CoinMarketCap was reflected on other data website which showed a similar decline.

While news that S. Korea is working toward a possible ban sent bitcoin prices down $2,000 in the country on Thursday, it's still a ways off.

As of Tuesday, bitcoin prices were trading at $14,700 on Coinbase's GDAX exchange, while bitcoin was trading at $21,200 on bithumb.

Last month Seoul banned its financial firms from dealing in virtual currencies.

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The South Korean government's push for onerous regulation comes as demand in South Korea is said to draw in college students to housewives raising worries about gambling addiction and to curb the speculative activity.

CoinMarketCap was not immediately available to comment on its move.

This morning 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.

However, on Sunday, the website chose to remove three Korean exchanges from its price calculations, and since Korean exchanges usually trade higher than other markets, the overall average price for each coin declined, leading many to believe that the crypto market as a whole was in a bearish trend. "It has started to resemble gambling and speculation", Mr Park added, citing the fact that bitcoin prices are higher in South Korea than globally - the so-called "kimchi premium".

Ripple's currency XRP fell more than 30 per cent on the day, after hitting an all-time peak of around $3.84.

Ripple is a USA -based provider of blockchain-based banking payments and it created XRP to facilitate cross-border payments and institutional settlement in seconds.