benchmark

Benchmark Rankings Launched to Combat Faked Cryptocurrency Exchange Data

13/06/2019 by Idelto Editor

CryptoCompare, an English cryptocurrency data analysis firm, has launched a unique exchange benchmark product which would help provide safeguards against false exchange volume reports.

On June 12, 2019, the firm revealed that its new product was developed as a means of stemming widespread concerns that numerous crypto exchanges around the world have been inflating their trading volumes.

Eliminating Faked Cryptocurrency Exchange Data

Increasingly frequent reports of wash trading and the inflation of trading volume numbers by crypto exchange platforms demonstrated “the need for a ranking methodology that does not rely on aggregate volumes,” CryptoCompare stated.

It further suggested that the problem was aggravated because lower-quality exchanges have increased market share by 30 percent over the past 12 months. This trend led many crypto exchange platforms to succumb to the pressure of inflating numbers for higher commercial values, in order to stay relevant in the rankings.

Co-founder and CEO of CryptoCompare, Charles Hayter, commented on the product and its purported impact on influencing the decisions of potential and existing crypto investors.

“In response to industry concerns over inflated volumes and the lack of reliable metrics for assessing cryptocurrency exchanges, we are excited to launch the CryptoCompare Exchange Benchmark,” he said. “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.”

Bitcoin’s Correct Market Size

In March 2019, cryptocurrency index fund provider Bitwise Asset Management stated in a report to the U.S. Securities and Exchange Commission (SEC) that up to 95 percent of the information found on unregulated crypto exchanges was either fake or noneconomic in nature.

The report was part of a proposed rule change on the company’s application to launch a bitcoin exchange-traded fund, and in it, Bitwise claimed to have gotten its data from the crypto statistics platform CoinMarketCap, which it accused of holding a vast majority of the suspected bogus data.

Given how popular that statistics platform is, Bitwise opined that it had contributed to spreading a “fundamentally mistaken impression” of the bitcoin market’s actual size.

Summarily, the firm claimed that about 95 percent of the reported volumes on exchanges were fake and that the actual bitcoin market is “significantly smaller, more orderly, and more regulated than commonly understood,” with a realistic value of about $273 million.

To help with this and provide added accountability concerning exchanges and their trading volumes, the exchange benchmark from CryptoCompare will rank exchanges based on both a qualitative (due diligence) and quantitative (“market quality based on order book and trade data”) approach.

Ranking the Most Trustworthy Exchanges

Essentially, the benchmark will deviate from the conventional ranking method of grading exchanges based on aggregate volume and use “correlation-of-volume-to-volatility and standard-deviation-of-volume” inputs instead.

CryptoCompare claims to have applied the benchmark’s ranking methodology on exchanges for May 2019, and according to its findings, the top-10 most trustworthy exchanges are Coinbase, Poloniex, Bitstamp, bitFlyer, Liquid, itBit, Kraken, Binance, Gemini and Bithumb.

The firm’s research unit also released a detailed outline of the benchmarking methodology. Per the release, the technology will feed into its aggregate indices to establish references for the top trusted exchanges, thereby providing investors with a reliable dataset.

The post Benchmark Rankings Launched to Combat Faked Cryptocurrency Exchange Data appeared first on Bitcoin Magazine.

Cryptocurrency Hedge Funds Were Down 12% to 19% in May 2018

19/06/2018 by Idelto Editor

No need to beat yourself up if your cryptocurrency portfolio exhibited less than stellar performance in May. Even the professional traders employed by the big hedge funds active in the space have suffered double digit declines during the previous month.

Also Read: Bitcoin in Brief Monday: From New York to Historic Istanbul Market

Crypto Hedge Funds Show Weak Performance in May

Data provided by three different industry trackers reveals that crypto hedge funds achieved considerable negative growth in the bear market of May 2018.

The Eurekahedge Crypto-Currency Hedge Fund Index estimates the losses made by crypto funds to have been 11.66% during May, and 2018’s year to date (YTD) performance to be -22.71%. Market analysis firm, Hedge Fund Research Inc. (HFR), estimates crypto funds to have suffered a decline of 15.48% during May, bringing the YTD performance to -33.3% per the company’s HFR Blockchain Index. And the Cryptocurrency Traders Index of hedge fund data specialist Barclay Hedge shows that the performance of those it is tracking dropped by 19.09% in May, and down 34.57% YTD. The differences between the three benchmarks are due to each following a different number of funds.

The weak May figures are in sharp contrast to the strong rebound performance seen the previous month, as Eurekahedge reported an increase of in 52.83% and Barclay Hedge a similar 44.86% in April 2018.

Reasons to Remain Positive in the Long Term

Despite the setbacks in May and high volatility from month to month analysts believe there are reasons to remain optimistic such as the recent SEC statement and new institutional money coming in. “I expect the crypto markets to remain volatile for the foreseeable future,” said Henri Arslanian, cryptocurrency lead for Asia at PwC. “Whilst retail investors may see volatility in the crypto markets as a downside, many crypto funds see it as an opportunity.” He added that the “long term positive impact of the number of institutional players entering” is more important than short-term price changes.

And interest among Asian investors is surging, according to Josh Gu, director of quantitative research at the HFR index division. “Cryptocurrencies have been very volatile, the topic is still hot in China and Japan.” He explained to the FT that cryptocurrencies appealed to individual investors with a large risk appetite. “However, the [Chinese] regulator has banned some of the crypto trading platforms because of risk, so some investors might have panicked.”

Is such a performance justifies paying for portfolio management? Share your thoughts in the comments section below.

Images courtesy of Shutterstock.

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The post Cryptocurrency Hedge Funds Were Down 12% to 19% in May 2018 appeared first on Bitcoin News.

Chainalysis Raises $16Mn – Plans to Monitor Multiple Blockchains

06/04/2018 by Idelto Editor

The blockchain surveillance company Chainalysis has announced it has raised $16 million USD in a Series A funding round from the firm Benchmark. Chainalysis also reveals it will be stretching its monitoring software efforts towards the bitcoin cash network and hopes by the year-end the platform will cover ten different public blockchains.

Also read: Russians Owe 13% Tax on Their Crypto Incomes

The New Chainalysis Product ‘KYT’ — Know Your Transaction

Chainalysis is a blockchain surveillance company that produces tools for governments and law enforcement agencies to track bitcoin transactions. The firm was created in 2014 by Jan Moller, Jonathan Levin, and Michael Gronager and has been known to help with criminal investigations involving digital currencies. For instance, Chainalysis has helped law enforcement officials during the Mt Gox investigation. Now the company has raised $16 million in capital from Benchmark and the firm is adding Benchmark’s Sarah Tavel to the Chainalysis board of executives.

Additionally, Chainalysis is adding a new product called ‘Chainalysis KYT’ (Know Your Transaction), a service that enables real-time feedback on the “the underlying purpose of transactions.” Moreover, the protocol will feed that feedback into exchanges’ transaction processing engines and alert customers of “risky customers and export suspicious activity reports”.

“We have opened KYT to a small group of early customers, and they have already seen a 20x improvement in the speed of account reviews,” Chainalysis explains during its announcement. “We’re excited to officially open this solution to exchanges and financial institutions everywhere, which represent the fastest growing segment of our business today.”

Bitcoin Cash Monitoring and Ten More Currencies by the End of 2018

Chainalysis also informs the public that the company is introducing multi-currency support going forward that will track other blockchain transactions. Chainalysis details that multi-currency support for blockchain surveillance entails “looking beyond bitcoin.”

“To start, we are launching bitcoin cash as part of ‘Reactor’, our investigation software, for our law enforcement and government customers, and we plan to expand to at least ten cryptocurrencies by the end of the year,” Chainalysis explains.

We think of the different blockchains that power different cryptocurrencies as all part of the same machine. Both ‘Reactor’ and ‘Chainalysis KYT’ will feature all the cryptocurrencies that we support this year.

Blockchain surveillance and cryptocurrency transaction monitoring firms have concerned digital asset proponents for quite some time. These privacy-invasive platforms have spawned the creation of bitcoin transaction mixers and altcoins meant to make blockchain transactions obfuscated. Despite the blowback, Chainalysis understands that the private sector and the nation states will always be willing to pay for their software as long as crime exists.

What do you think about Chainalysis raising $16 million and preparing to monitor the bitcoin cash blockchain? Let us know how you feel about blockchain surveillance companies in the comments below.

Images via Shutterstock, and the Chainalysis blog.

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