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.”