Cryptocurrency market data provider Nomics has launched indicators for crypto asset market capitalization and volume data aggregated from transparent exchanges.
According to an announcement on May 28, the new indicators introduced by Nomics only include data from cryptocurrency exchanges with A+, A or A- transparency ratings. Nomics co-founder and CEO Clay Collins explained to Cointelegraph what he believes makes the transparent market cap indicator interesting:
“Transparent market cap is interesting because it highlights times when total market cap is going up while transparent market cap is going down, and vice versa. These divergent market cap trends point to different market discovery forces on transparent vs. non-transparent exchanges.”
Furthermore, Collins also noted that the transparent volume indicator allows to understand what percentage of the volume is flowing through exchanges with transparent data practices.
Nomics bases its transparency ratings largely on data contained in a report released in May 2019 by Bitwise Asset Management, according to which 95% of Bitcoin (BTC) trade volume was fake.
The exchange explains that transparent exchanges provide historical trade-level data, which the firm describes as “the most granular and audible form of pricing data available.”
Fighting toxic behavior by crypto exchanges
The new volume and crypto asset market cap indicators are supposed to be more reliable and less likely to be manipulated. Collins commented:
“Most exchanges give low quality, non-historical data. […] This is the easiest data to manipulate. It enables wash trading, ticker stuffing — all those toxic behaviors we’ve been fighting with our Transparency Ratings. We’re proud to put transparency front and center on our site.”
According to Nomics, total volume often exceeds transparent volume by a factor of 10. Collins admitted that he is convinced that there are non-transparent exchanges that do have real volume, so the difference is not only caused by the exclusion of fake trading volumes.
Collins told Cointelegraph that the difference between total market cap and its transparent counterpart is less noticeable than in the case of volume metrics:
“Transparent global market cap is almost always less than raw global market cap, but not by a huge factor.”