CoinMarketCap Addresses Skewed Volume Concerns
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Main page News, Cryptocurrency exchanges

In a recent announcement on their blog CoinMarketCap.com (CMC), one of the biggest and most trusted sources that supply price information about cryptocurrencies voiced their volume related concerns. From now there will be no more minimum volume limit that was used to constrain the number of exchanges on the site. This is one of the first measures that will address the problem of integrity of trading volume numbers on exchange sites.

CMC point out three concerns that are causing skewed volumes.

  1. Fee-free/Transaction mining models, these are model, where coins are acquired or “mined” for making a transaction, after which the trade fees are returned. This can cause trading between users or bots for the sake of acquiring these transaction coins.
  2. Low fee models that some exchanges implement with the hope that more users will trade there. These fees have different gradation by account type and transaction volume, can fluctuate and not transparent.
  3. Artificial volumes/wash trading, the phenomenon when an exchange requires a minimum level of volume. This causes artificial trading of the coin to supply the necessary volume.

In light of these concerns, CMC will be introducing new features to their platform. Users will be given more “levers and toggles” to filter the desired information. Also, new metrics will be introduced that will allow users to see 7-day and 30-day volumes and the date each exchange was established.

WHY IS THIS IMPORTANT?

  1. CoinMarketCap is the largest crypto rating platform, with anyone who wants to find out what is happening on the market goes there to see the situation.
  2. The information the users will be receiving will be more transparent with a higher level of integrity, therefore it will be a better representative of what is really happening on the market and allow the users to analyze the situation themselves.
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