CoinMarketCap Introduces Liquidity Data
When users need to find out data about certain cryptocurrencies and exchanges, usually they go to CoinMarketCap for that information. Now, CMC have introduced a new metric for everyone to enjoy, called liquidity. This new data set will replace volume so that users can see exactly how much liquidity an exchange has. The reason for this change is that volume can be manipulated very easily by wash trading.
Carylyne Chan, Chief strategy officer of CoinMarketCap believes using this method to rank exchanges is the way forward, stating:
“We believe our adaptive methodology will make our metric very difficult to ‘game’ as orders would need to be placed close to the mid-price, or risk being counter-productive to the Liquidity metric scoring.”
Currently the top three exchanges on the new liquidity metric is HitBTC with $62,162,996, Binance with $60,354,605, and Huobi Global with $32,025,960. Currently, in their beta mode, only 54 exchanges have been ranked, but its possible more will be added in the future.
This new initiative has been in the works since Q2 of 2019 as CoinMarketCap thought it necessary with all the inflated trading volumes coming out of the exchanges.
In May 2019, CMC asked the exchanges to submit live trading data and order book data, once collected it goes through multiple data cleaning and verifications to ensure the integrity of the information given.
The liquidity data is collected every 24 hours using crypto-asset order book depth, mid-price, and more.