CoinMarketCap, one of the prominent aggregators of cryptocurrency market data, was recently accused of manipulating trading volume. CoinMarketCap responded by stating that concerns over inaccuracies “were valid” and that it would be adding more data for its users to make better decisions.
CoinMarketCap is one of the top 500 most-visited websites, and is popular among crypto users for information regarding crypto prices, exchange volume, market cap, and rankings. However, a report published by Bitwise on 20 March suggested that the site’s “data was wrong”. The Bitwise report claimed that about 95% of Bitcoin’s exchange trading volume listed on CoinMarketCap was fake or non-economic in nature, “thereby giving a fundamentally mistaken impression of the true size and nature of the Bitcoin market”.
The crypto data aggregator site has notable influence over the cryptocurrency ecosystem, including the prices of cryptos. In early 2018, when CoinMarketCap removed numerous South Korean exchanges from its price calculations, a sharp fall in most cryptocurrencies’ prices was recorded, reported Bloomberg.
The trading volume of the popular website is in question yet again, and it has planned to fix the problem by including a set of new tools to offer more transparency in trading, said Carylyne Chan, the Global Head of Marketing at CoinMarketCap, in an email to Bloomberg News.
Chan gave examples of liquidity measures, hot and cold wallet balances, and traffic data for listed exchanges. She added,
“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,’” Chan said. “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.”
CoinMarketCap will be making a series of changes in response to concerns about fake trading volumes. In July 2018, the website said it removed volume requirements for exchanges to be listed, along with the introduction of seven-day and 30-day volume. It also started listing the date of establishment of exchanges to help users.
In response to people’s concerns, CoinMarketCap responded,
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Namrata is a full-time journalist and is interested in covering everything under the sun, with a special focus on the crypto market.