All common items should be cutted by 1 or 2 copper, even for 1 gold or up to 10g or 100g.. it's all about the scale. But, someone undercutting by more than 20% is a complete dumb if you ask me.
It's pretty easy that someone comes after you and cuts your offer by another X%, that way, in less than 5 posts items can drop by 100% or more their cost and you, indeed, ruin the market.
No matter what you think, you are screwing the prices around that items. However, it's all about finding the correct moment, wait for some other noob to keep undercutting and buy it all, then you sell it and nothing happened kek.