New Crypto Integrity (CI) Report Shares the Cleanliest Trading Volumes and Liquidity Metrics
Crypto Integrity (CI) announced its quarterly report on the state of cryptocurrency exchanges liquidity and price of cryptocurrency asset. The article on Hackernoon titled, “True liquidity and price discovery in crypto space” further explains the main determinants of liquidity on an exchange as – order book spread size and the volume of the order book.
The cryptocurrency exchanges have long been plagued by the fake volume problem as the industry continues its journey towards global adoption.
The persistent problem is currently being solved by cryptocurrency data and statistics companies such as Crypto Integrity (CI). The report on the liquidity statistics across crypto currency exchanges was released last week ranking the best exchanges to make trades and make price discoveries.
The Crypto Integrity report in brief
In the report, Coinbase Pro is ranked as the best provider of liquidity and execution of trades in the market. Furthermore, Kraken and Bitstamp were chosen as two of the best exchanges in the industry to retail and institutional investors as well. To finalize on the main aspects of exchanges, Bitfinex ranked the exchange with deepest liquidity order book.
The key metric in the analysis is liquidity given the inability of cryptocurrency exchanges to tamper with liquidity as they do the volumes traded. An exchange with fake volumes presents a red flag on the market risk of the exchange.
The order book actually presents a clear picture of how the exchange is fairing. While volumes can be wash traded and manipulated by the exchanges, manipulating order books will need the exchanges to create orders which may be filled hence presenting a huge risk. This makes order books a better way of determining the stability of the exchange.
The Bitcoin Price in April spike caused by..?
The report further focused on the 20%+ Bitcoin price spike on April 2 that saw the price push past the $5000 USD mark shortly after crossing the $4,200 USD resistance level. The
Bid-ask spreads of selected exchanges between April 1-3 2019 (Source: CI)
According to the analysts at CI, the hike in price may have been caused by trading activity on Bitfinex. As shown in the chart above, the selected exchanges saw a hike in the bid-ask spreads around the same time owing to the price increase.
However, Bitfinex saw some abnormal widened spreads in the bid-ask prices given the volumes of trade were low and the volatility was low too. Bitfinex is yet to comment on the matter.
Given the recent troubles with Tether (USDT), Bitfinex is rowing along market risks given the speculated manipulation of trading volume.