Recent reports about trading volumes have left investors and market experts concerned about the validity of data put out by such sites as CoinMarketCap, which is one of the definitive resources for cryptocurrency investors.
CoinMarketCap offers investors data on prices, trading volumes, market caps. The platform recently added a rankings metric, the Fundamental Crypto Asset Score (FCAS), based on data provided by Flipside Crypto.
A top 500 site, CoinMarketCap has taken steps to offer better data and tools to users after it admitted that its statistics are less than perfect, and that plans to revamp the system are in place.
Carylyne Chan, Global Head of Marketing at CoinMarketCap, told Bloomberg that providing comprehensive information is an important priority for the platform:
For instance, if an exchange with low traffic has $300M volume and just 5 BTC in its wallet, users will be able to draw their own conclusions without the need for us to make arbitrary judgment calls on what is ’good’ or ’bad. We want to state that our philosophy is to provide as much information as possible to our users, so that they can form their own conclusions and interpretations –- and not introduce our own bias into that mix.
That said, there are several upgrades in mind. The planned improvements include liquidity measures, hot and cold wallet balances, and traffic data.
The TIE and Bitwise Asset Management recently released analyses that suggest much of the data provided by CoinMarketCap is wrong.
For nearly 90% of all exchanges, the represented trading volumes did not match the calculated trading volumes. The TIE measured website traffic and the average trade made per visit, extrapolating that wash trading is rife within the market, thus offering a misleading impression of its size.
1/ New Research from us @BitwiseInvest.
As part of 226 slides presented to the SEC on our ETF filing, we did a first-of-its-kind analysis of *order book data* from all 81 exchanges reporting >$1M in BTC volume on CMC.
TLDR: 95% of reported volume is fake but LOTS of good news! pic.twitter.com/TuXLlDCRyP
— Bitwise (@BitwiseInvest) March 22, 2019
This is nothing new in the cryptocurrency space, but investors will have to be more wary than ever before, now that increased scrutiny is being imposed on exchanges and their financial operations.