Cryptocurrency data and indices provider CryptoCompare is launching its first cryptocurrency Exchange Benchmark, according to a press release CryptoCompare shared with The Block. The ranking assesses more than 100 active spot exchanges and analyses their reliability.
The release of the index follows recent reports exploring wash trading and fake volumes by exchanges in the market for digital assets. According to Bitwise’s research published in March, as much as 95 per cent of reported bitcoin trading volume had been created artificially. Similarly, incentivised trading schemes can also lead to higher trading volume. CryptoCompare reports lower-quality exchanges have increased their market share by almost a third in the last 12 months. The Block's own research has shown up to 86% of cryptocurrency trading volumes are likely fake.
As part of their analysis the firm shared the ten most-trusted exchanges for the month of May, ranking them on their legal structure, market surveillance, and market quality. The top exchanges are as follows:
“In response to industry concerns over inflated, misleading exchange volumes and the lack of reliable metrics for assessing cryptocurrency exchanges, we are excited to launch the CryptoCompare Exchange Benchmark,” said CryptoCompare co-founder and CEO Charles Hayter. “We look forward to bringing greater transparency to the digital asset class and improving decision-making for market participants by providing a dataset they can trust.”
CryptoCompare's Exchange Benchmark product uses more than 30 metrics and employs both a qualitative and quantitative approach in cryptocurrency exchange assessment.