CoinMarketCap.com has unveiled a new ranking system for all trading pairs listed on the industry’s go-to aggregator of cryptocurrency data, helping users make better decisions on where to trade. It also introduced a new indicator that reflects how confident is CoinMarketCap in the trading volumes reported by a participant exchange for a specific pair.
Instead of a single metric ranking system, CoinMarketCap is transitioning to a combined system that covers more than 22,000 market pairs spanning over 5,500 cryptocurrencies. The instruments will be algorithmically scored across three aspects — reported volume, liquidity, and an estimation of an exchange’s user base.
Prior to the new system, which will become the default for all listed pairs, the ranking was sorted by reported volume only, following the removal of the “adjusted volume” metric for simplicity.
CoinMarketCap is also rolling out a ‘Confidence indicator,’ shown in three bands – High, Moderate, and Low. The associated label is based on a machine-learning algorithm that takes all the data CoinMarketCap has (e.g., liquidity, order book depths, time and sales, user base size estimated by web traffic variables) to determine if the volume reported by exchanges for that pair is inflated and to what extent.
The bands are categorized as follows:
Moderate 50% – 75%
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“Our new ranking and Confidence indicator will use the sophisticated tools we have at hand to simplify the process of deciding on the best market pairs, saving our users time, and managing some of the common risks endemic to errant exchanges,” said Carylyne Chan, interim CEO at CoinMarketCap.
The new changes come as the crypto aggregator site has acknowledged the concerns aired by the crypto community about inflated turnover figures. And in an attempt to obtain a true picture of global cryptocurrency volume, it introduced new features that account for the many variables that affect trading volume and allowed users to filter trading venues according to them.
Although volume is arguably the most important metric for a cryptocurrency exchange, most enthusiasts are well aware that the prices on CoinMarketCap.com look skewed, and volumes are ‘relatively’ fabricated.
CoinMarketCap, which was acquired by Binance in a deal reported to be worth around $400 million, inexplicitly admitted that a bit of wash trading and artificial volume inflation is to be expected in a thoroughly unregulated market. What it did not acknowledge though, was the magnitude of the fraud.
According to estimates from Forbes, over 125 million people are relying on CoinMarketCap data, which allows the 40-person firm to generate $20 to $30 million per year in advertising revenue.