What’s Up With Upbit At 9 Am?

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The “promised time” is what mil­lions of users of Upbit call 9 a.m.

Upbit is the largest cryp­tocur­ren­cy exchange in South Korea, with a user base of 8.9 mil­lion and at one point han­dled a whop­ping 80% of the total trade vol­ume of cryp­tocur­ren­cies in the coun­try. Amid a pro­longed bull run of the glob­al cryp­to mar­ket, South Korea has also seen major inter­est across vir­tu­al asset investments. 

But curi­ous­ly every day, Upbit users see dra­mat­ic volatil­i­ty in the prices of dif­fer­ent alt­coins once the clock strikes 9 a.m. Korea time. 

Online posts about the “promised 9 a.m.” at Upbit have been pil­ing up steadi­ly, with users try­ing to guess which cryp­tocur­ren­cy might see a sud­den price surge the next morn­ing. Some com­pare this to a horse race, as investors look­ing for short-term prof­it are eager to find out where the 9 a.m. mag­ic will hap­pen next. 

Yes­ter­day at Upbit, it was the Aer­go cryp­tocur­ren­cy (AERGO). As soon as the morn­ing clock hit 9 o’clock, Aergo’s price start­ed soar­ing more than 30% for five min­utes. Aer­go is an alt­coin that is val­ued around US$0.40, and usu­al­ly does not expe­ri­ence such high volatil­i­ty. This morn­ing, unex­pect­ed and big price changes struck oth­er alt­coins list­ed on Upbit, includ­ing Moss Coin (MOC) and BORA cryptocurrency. 

So what caus­es this witch­ing hour at Upbit?

South Korea’s largest crypto exchange

Since its found­ing in 2017, Upbit has shown incred­i­ble growth in the num­ber of users. As of Octo­ber this year, Upbit mem­bers totaled 8.9 mil­lion, more than dou­ble its user base of 4 mil­lion in Feb­ru­ary 2021. On the sin­gle day of May 20, 2021, Upbit was vis­it­ed by 5 mil­lion people.

Upbit is also among South Korea’s most trust­ed cryp­tocur­ren­cy exchanges as it was the first in the coun­try to be offi­cial­ly reg­is­tered under the Finan­cial Intel­li­gence Unit’s new cryp­to regulations.

But sev­er­al con­tro­ver­sies sur­round­ed Upbit over the years. Last month, a law­mak­er accused the cryp­to exchange of delib­er­ate­ly list­ing faulty tokens for com­mis­sion prof­its, only to delist the tokens soon after. There was also spec­u­la­tion about Upbit’s for­eign offices in Sin­ga­pore and Indone­sia, whether they were in actu­al oper­a­tions or just paper companies.

Competing theories

There are sev­er­al the­o­ries that try to explain Upbit’s “promised time.”

Some spec­u­late the sit­u­a­tion is a nat­ur­al occur­rence, when flocks of com­muters — equipped with the mobile Upbit app — start trad­ing as their work­ing day starts, caus­ing token prices to rise in general. 

But this does not explain why Upbit’s 9 a.m. surge hap­pens even on Sat­ur­days and Sundays. 

Oth­ers rea­son that 9 a.m. is when the local stock mar­ket opens, pos­si­bly caus­ing a sud­den influx of liq­uid­i­ty into the cryp­tocur­ren­cy mar­ket. But that does not explain why the price volatil­i­ty hap­pens with only a few cryp­tocur­ren­cies at a time and not with oth­ers. Nor why this phe­nom­e­non is observed dur­ing the week­end when the stock mar­ket is closed.

The the­o­ry that more peo­ple buy into is that at 9 a.m., the token price fluc­tu­a­tion range from the pre­vi­ous day is reset — mean­ing that 9 a.m., is when Upbit starts num­ber­ing the rise or fall of token prices for that day. Many investors and some media reports sus­pect that a cer­tain group of spec­u­la­tive investors takes advan­tage of the num­ber reset. 

Since a sharp increase in cryp­to pur­chas­es rais­es the mar­ket price and a large sell-off low­ers the mar­ket price, some sus­pect that it is pos­si­ble to take advan­tage of the price fluc­tu­a­tions dur­ing the “promised time.” Con­spir­a­cy the­o­rists sug­gest that cer­tain investors will buy enough of a cryp­tocur­ren­cy to cause a price surge, and then quick­ly sell off the pur­chase once the price goes high­er, fed by ordi­nary investors, called “ants” in Korea, who fol­low in buying. 

This phe­nom­e­non is hard to find on oth­er exchanges. This could be because oth­er exchanges main­ly list well-known cryp­tocur­ren­cies that are rec­og­nized glob­al­ly. In con­trast, Upbit han­dles many small Korea-based cryp­to projects and lists alt­coins with tiny mar­ket capitalizations.

Some the­o­rists have gone even fur­ther to blame the price surges on trad­ing “bots” — or auto­mat­ed pro­grams that traders use to take advan­tage of the cryp­tocur­ren­cy mar­kets that trade 24/7 all over the world. These bots have the abil­i­ty to react more quick­ly com­pared to man­u­al investors. 

Could any of these the­o­ries be con­firmed — or debunked?

Kim Hyoung-joong, head of the Cryp­tocur­ren­cy Research Cen­ter at Korea Uni­ver­si­ty, expressed doubts that spec­u­la­tive forces are pur­pose­ly try­ing to influ­ence cryp­to mar­ket at 9 a.m. sharp every day, although he can­not say for sure that they don’t exist. 

“Some may want to manip­u­late token prices, but it’s hard to do so at Upbit, where the amount of trans­ac­tions is very large,” Kim said in a video inter­view with Forkast.News

“I’ve looked into the online forums, I’ve talked to Upbit and fel­low col­leagues in the cryp­to field about this. And no one seems to know clear­ly about these ‘spec­u­la­tive forces’ that everyone’s been talk­ing about,” Kim added, say­ing that he thinks the phe­nom­e­non was exag­ger­at­ed. “There’s usu­al­ly oth­er rea­sons behind the price surge or fall. But once it shoots up and down, peo­ple imme­di­ate­ly think some force is behind it.” 

Rather, Kim believes that there are like­ly just a lot of indi­vid­ual investors that con­verged on a sim­i­lar strat­e­gy, where traders try to make a prof­it off price changes that they expect to hap­pen in a short win­dow of time. 

Anoth­er expert, Kim Seung-joo, pro­fes­sor of cyber­se­cu­ri­ty at Korea Uni­ver­si­ty, says it would be hard to iden­ti­fy “groups” behind any 9 a.m. manip­u­la­tions even if they exist­ed. “It’s hard for out­siders to con­firm their exis­tence with­out see­ing Upbit’s log records,” the pro­fes­sor said.

What does Upbit say?

As for Upbit, the cryp­to exchange shrugged when asked by Forkast.News the rea­son for its 9 a.m. price movements. 

“As we are an exchange, it is dif­fi­cult to give you a rea­son for any price volatil­i­ty,” an Upbit spokesper­son said. “We do not inter­fere with the tim­ing of trans­ac­tions or prices.” 

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