CoinMarketCap Liquidity Trackers Evolve: a New Main Standard?

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by Jeff Fawkes · 3 min read
CoinMarketCap Liquidity Trackers Evolve: a New Main Standard?
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CoinMarketCap, one of the oldest services in the industry, will introduce new ways to measure the project’s success based on liquidity.

CoinMarketCap was established back in 2013, and it has seen a wild history full of glory and shame. We won’t be coming back to all the episodes of CMC rising. Let’s say it is exciting. Within this piece, let’s talk a bit about their recent improvement. Coinspeaker loves improvements, and here’s the one you should at least know about.

CoinMarketCap Liquidity Matter More Than Fake Volumes

CMC introduced its new service for measuring exchanges liquidity, which is a new primary metric that they are concentrating on. Carylyne Chan, CSO of CMC, has said that adaptive data gathering will help to filter out the scam actors. To game the algorithm, the dark players would need to place orders close to mid-price.

At the same time, the company sees volume reporting as something worthless. Many of the exchanges perform wash trading, and some analytic firms report that they have added up to 90% of their volumes, meaning that cryptocurrencies may be worth much less than one suspect looking at the official charts.

At CMC, they have decided to make liquidity a new primary metric, with the ability to avoid doubtful data given by the exchanges. Carylyne noted:

“Today, we are introducing a new metric to highlight what matters most to investors and traders: Liquidity. With our Liquidity metric, we hope to provide public good to the crypto markets by encouraging the provision of Liquidity instead of the inflation of volumes.”

Data Shows Binance Is the Exchange Number One

In a phone interview with Bloomberg, Chan explained:

“When people are inflating their volumes, they are inserting orders into the order book, so they buy and sell to themselves. What we are trying to do here is to counter that.”

The technology seems to be working already. Previously, CMC was featuring the Coinbene exchange as the first one, using the data from their (blown up?) coin inflow/outflow counters. After switching to Liquidity based operations, the metric showed a different picture. Binance is now the exchange number one, which is more of a realistic scenario considering that they even support such exotics as Nigerian Naira, Ukrainian Hryvnia and Russian Ruble.

However, back in March, the Bitwise manager was reporting to the U.S. SEC that near 95% of all the reported cryptocurrency trading is fake. 

CoinMarketCap Fights Fake Data, Press Helps Out

In July 2019, in a partnership with Crypto Briefing, CMC has launched its data tracking service called Simetri. This tool verifies the order-book data and makes sure that exchanges provide the actual data to the researchers from around the world. The profile containing this technology is implemented within the CMC user account system.

It uses data from core processes of projects such as support from users, development efforts. It scans the current level of utility, the ecosystem state and so on. Sustainable projects will get to the top of the charts, says Carylyne Chan while describing the system in her press-release from July 9, 2019.

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Jeff Fawkes
Author Jeff Fawkes

Jeff Fawkes is a seasoned investment professional and a crypto analyst. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.

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