December 15, 2019 6:43 pm
Published by cryptohappening
Everybody in the crypto world probably heard of CoinMarketCap by now.
But can we just blindly trust the data they present to us? Well, yes
but actually no. Over 80%+ of the data CMC shows is collected from
exchanges that practice wash trading.
But what is “wash trading”? Wash trading simply explained: I give you
$1 in exchange for 1 apple; we write down that trade and add a total
volume of $1 and 1 apple. If we continue doing this for an hour we
probably tossed around that same apple and dollar 3600 times, creating a
total volume of $3600 and 3600 apples. Noticing something? We didn’t
actually trade apples worth $3600, we just tossed around 1 apple 3600
times. That is basically wash trading — creating volume between a few
parties involving a small amount of money.
So how can you detect wash trading? Well it’s actually harder than
you think. BitWise did a great job a few months ago when they wrote down
a list of exchanges practicing wash trading based on their analyzing strategy.
They also presented that list to the US SEC when they tried to apply
for a BTC ETF. But can we 100% trust this list? Not 100%, but it’s a
Now that we got a list of “trustworthy” exchanges, we can build on
top of it. To even detect the last bit of wash trading on those
exchanges MarketCap.cc has been developed, a website similar to CMC without all the fake volume.
MarketCap.cc stores ALL trades made on each exchange in realtime and
then analyzes them, trying to find any wash trading activities on market
pairs and then actively filters them out. We can do that by looking at
frequency, quantity and price of each trade on a selected pair. All
trades are stored in a Database forever.
MarketCap.cc also provides a Trading Terminal where you can analyze market movements yourself.
Future plans are including more exchanges, more assets and generally show more data than now.
Categorised in: Guest Post
This post was written by cryptohappening