Why did NEM (XEM) cryptocurrency prices suddenly jump 40%?

Posted: 3 July 2018 6:00 pm
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A sudden surge on Bithumb has kicked XEM prices up a notch.

The cryptocurrency markets have been enjoying sizable gains in the last 24 hours at the time of writing, and NEM in particular has been in the limelight, though the size and shape of its gains vary depending on where you look.

On Live Coin Watch, it's showing somewhere in the field of a 40% rise over the last 24 hours, while CoinMarketCap has it closer to 20%.

Live Coin Watch prices

CoinMarketCap prices

What's the difference?

The difference is that the latter excludes outliers from its measurements, and in this case, the outlier is Korean won trading pairs on the Korean Bithumb exchange, which are accounting for about 45% of the 24-hour trade volume and is equivalent to about US$28 million.

For whatever reason, someone's going to town on XEM at Bithumb and buying it up with fiat in the form of Korean won.

How to move prices

NEM is a protocol-level cryptocurrency project, generally designed to serve as a multi-purpose platform for decentralised applications, and the recent rise could be based on a few different factors.

Ignoring all the recent news from the coin itself, the most cynical explanation could be that it's just someone playing the markets and deliberately moving prices with heavy buying on a single exchange.

When you're looking at how much money is needed to move a market, it's important to note the difference between the average price and total volume across all exchanges, and the volumes and prices on a single exchange.

Digital currencies can be moved across exchanges much more quickly and easily than other assets, and so present a lot of arbitrage opportunities. If prices move dramatically on a single exchange, the prices on other exchanges will typically lag initially, but quickly catch up as people start moving funds and re-adjusting their buy and sell orders. This means that actually moving prices through sheer buying volume doesn't necessarily mean making a dent in the overall market, but can instead be done by deliberately moving prices hard enough on just one sufficiently prominent exchange.

Bithumb is one of the largest exchanges in Korea, and Korea is one of the world's most prominent cryptocurrency nations, so price movements there can probably move the needle across the board. It's also possible that the jump is connected to the recent Bithumb hack, and that someone's just started using their favourite exchange once again now that the furore has died down and their confidence is restored.

But in this case, there's no suggestion that this is what happened.

What's NEM up to these days?

In the last 24 hours, there are a few pieces of news that could account for a sudden buy-up of XEM.

The main one might be that someone just decided the markets have bottomed out and that they want to buy a lot more XEM. The coin has always been very prominent around Asia, and it's no slouch in the rest of the world. It's very deliberately created a presence in Australia and in New Zealand. Japan and Korea remain its primary markets though, and that might be where most price-shifting news is likely to originate.

In the last 24 hours, a new NEM wallet has hit the market in the form of the security and UI-focused mobile Raccoon Wallet, but it's focused on Japan and won't necessarily hit the Korean markets directly. Also it is just one wallet among several, and it seems unlikely that it would move prices so heavily.

Others are attributing the gains to a recent and continuing series of partnerships around the world. The highest-profile recent partnership might be with the Pillar Project, bringing two well-known teams together and giving NEM an extremely valuable tool in the form of an identity management system for the network. This might have been enough to move the market.

But despite all the reasons the price might change, it might just be the market doing market things. In a now-somewhat-rare example of technical analysis successfully predicting prices, some people were predicting this NEM pump based on a combination of ramping up trade volume and NEM being a relatively solid project that shed over 90% of its value since its all-time high. This suggested that someone would come along soon to pick the prices up from the bottom.

That might be what just happened.

Whether it can sustain this price rise remains to be seen. It's naturally already started sinking back down from the recent spike, as any coin would, so the question now is whether it ends the day higher than it started.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and NANO.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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