CryptoCompare, which is a cryptocurrency data provider based in London, launched an Exchange Benchmark product which ranks over 100 crypto spot exchanges around the world. This news was revealed in one press release on the 12th of June.
CryptoCompare launching the Exchange Benchmark product
According to the data provider, this new product was launched responding to the growing industry concern which was sparked by research indicating that an essential number of crypto exchanges was using wash trading, as well as other strategies globally, including incentivized and spoofing trading schemes, to artificially inflate trade volumes.
According to the latest press data, the problem was getting even worse with lower quality exchanges, increasing the market share by about 30% in the last twelve months, demonstrating the need for a ranking methodology which doesn’t rely on aggregate volumes.
To tackle the problem, as well as provide a more reliable insight into exchange trading volumes, CryptoCompare actually designed its Exchange Benchmark deploying the quantitative pr market quality based on trade data and order book and qualitative or due diligence approach, according to the statements of the press release.
Using the metrics of the benchmark
Instead of relying on aggregate volume data, the benchmark actually uses correlation-of-volume-to-volatility, as well as standard-deviation-of-volume as inputs to over thirty parameters.
With the use of the metrics of the benchmark to analyze data for May of this year, CryptoCompare reveals that it actually deems the most top ten trusted exchanges globally to be Poloniex, Coinbase, Bitstamp, Liquid, bitFlyer, itBit, Kraken, Gemini, Binance, and Bithumb.
The press release even noted that the benchmark is going to feed into the aggregate of CryptoCompare indices to establish reference rates for the top tier exchanges, trying to provide the traders and investors with a high-integrity dataset. Together with this product, more detailed insight into the exchange benchmarking methodology of the firm was released by the research unit of CryptoCompare.
The analysis of Bitwise Asset Management
According to reports, a study from the crypto index fund provider, called Bitwise Asset Management, which was submitted to the SEC or Securities and Exchange Commission of the U.S. during March of this year, claimed that about 95% of the volume on unregulated exchanges seems to be fake, or even non-economic in nature.
The analysis of Bitwise echoed a host of reviews from before, which seemed to corroborate the prevalence of the misleading trade volume reporting in the industry.
On the 11th of June, CryptoCompare has also revealed a partnership with Nasdaq to release a new crypto pricing product which is targeted at institutional investors, following an announcement from recently of a joint venture with BitMEX, to build a real-time crypto futures dataset together.