Step aside CoinMarketCap, your time may be up; there’s a new straight shooter in town with reliable bitcoin trading volume metrics. Following recent research and criticism of CMC’s data collection methods, a New York-based alternative has stepped into the fray.
Bitcoin Trading Volume Overexaggerated
CoinMarketCap has, for a long time now, been the go-to place for all kinds of cryptocurrency metrics. In fact, it is a top-500 website globally.
Initially, as the name suggests, it listed cryptocurrency prices, ranked on their total market capitalization. The problems arose when it began ranking exchanges based on daily trading volume – as reported by the exchanges themselves.
An exchange which ranked highly could command increased token listing fees; after all, who wouldn’t want their token to be exposed to all that traffic. So it was beneficial for an exchange to report higher volume than it actually processed, through wash-trading or simple misreporting lying.
As a result, according to CMC data, 15% of Bitcoin’s entire market cap changed hands in the last 24 hours. As it does every day.
Uncovering Fraudulent Exchange Volumes
The fightback against these volumes began with reports from the Blockchain Transparency Institute (BTI). Through a continually developing methodology, the Institute highlighted ever increasing evidence of wash trading. In December, it detected fake volume in 70% of the top 10 exchanges listed on CMC, with actual volume being less than 1% of that reported in some cases.
Then last week, in a presentation to the SEC, Bitwise claimed that 95% of reported volume was fake. This led CMC to admit that concerns are ‘valid’, and announce a forthcoming set of tools to increase transparency.
New ‘Real 10’ Metric Filters Fake Volume