The phenomenon of 'Caution Beam' and 'Delisting Beam' in domestic virtual asset exchanges

In major virtual asset exchanges in the Republic of Korea, certain coins have experienced rapid price increases, referred to as 'Caution Beam' and 'Delisting Beam,' after being designated as caution items or confirmed for delisting. This phenomenon is causing confusion among investors, necessitating caution.

On the 24th, the Strike (STRIKE) coin traded on Upbit surged nearly 270% from 8,000 won to 30,000 won over two days starting from the 22nd, following the delisting notice on the 21st. However, in the morning of the 24th, the price dropped to 20,000 won.

About a 270% surge

This coin also exhibited similar patterns when it was designated as a caution item on the 4th, where it rose by about 190% from 8,000 won to 23,000 won on Bithumb over two days, before plummeting back to 10,000 won, reflecting extreme volatility.

Price differences and 'Caging Pumping' phenomenon between exchanges

Notably, there has been a significant price discrepancy between Upbit and Bithumb. On the 4th, when both exchanges simultaneously designated caution items, Upbit recorded a peak price of 12,700 won while Bithumb reached 23,000 won. Conversely, during the recent delisting confirmation, Upbit saw a peak of 30,000 won, while Bithumb recorded 22,370 won.

The reason the Strike coin exhibits this phenomenon exclusively within domestic exchanges is that it is a typical 'Kimchi Coin.'

99.99% of the global trading volume occurs on Upbit and Bithumb, isolating it within the domestic market.

Furthermore, domestic exchanges implement policies to block deposits for coins designated as caution items, exacerbating the 'Caging Pumping' phenomenon, making it impossible for quantity transfers between exchanges.

Repeating patterns and inadequate investor protection measures

This phenomenon is not limited to just the Strike coin.

Another Kimchi coin, StormX (STMX), which was designated as a caution item in May, also showed about a 30% surge and drop during that time. In January of this year, the prices of Steem Dollar (SBD) and Bitcoin Gold (BTG) saw over a double increase in just a few days after being designated as caution items on Upbit.

Coins that are designated as caution items or targets for delisting are mostly those with inadequate project progress or opaque operations. However, these coins are enticing investors with high volatility, exacerbating market confusion.

Exchanges, which receive commission income as investors flock to these coins, only issue announcements regarding caution item designations, and the additional measures for investor protection are insufficient.

An industry insider stated, "For K-coins that are exclusively listed or concentrated in domestic exchanges, when a caution item designation is made, it creates a caged environment, resulting in extreme 'Caution Beam' and 'Delisting Beam' phenomena. For caged coins controlled by forces, individual investors should refrain from rash investments as it is challenging to predict the timing of surges and drops."

Image source: Upbit website, reference material for understanding the article / gettyimagesbank, reference material for understanding the article / News1