Only 15% of Crypto Exchanges Hold User Funds in Cold Wallets: CryptoCompare Report

According to the monthly crypto exchange benchmark report by CryptoCompare, Gemini and Coinbase are at the top of the top crypto exchanges list with the highest score and “AA” grade. At the same time, Binance DEX grabs the first spot on the decentralized crypto exchanges’ list.

Top-tier exchanges like Coinbase and Binance are pushing the lower-tier ones such as Bitexbook out of the market. Top tier exchanges that have the lowest amount of risk for traders have been increasing their market share throughout 2020, which could be taken as a sign of a more mature market.

Source: CryptoCompare

In Q4 of 2019, the top tier exchanges accounted for 32% of global volume, which jumped to 40% in Q2 of 2020. Lower tier exchanges’ market share meanwhile has continuously been on a decline from 68% in the final quarter of 2019.

Record Low Funds Lost in Exchange Attacks

Security at crypto exchanges at large, however, remains poor. Only a meager 15% of exchanges claim to hold 95% of user funds in cold storage, wallets that aren’t connected to the internet, and as such resistant to hackers.

12% of crypto exchanges use a third party custody provider to store user assets, up from 9% from Q4 2019.

4% of exchanges have been hacked in the last year. Most recently, UK-based crypto exchange Cashaa lost 336 Bitcoin, worth about $3 million in an attack, which resulted in a breach of one of its wallets.

The attack came when the industry is seeing a record low in funds lost in exchange attacks. Cashaa was one of the largest attacks of this year.

Source: TradeBlock

Just last week, a report from the Financial Action Task Force (FATF) came in, which the international financial watchdog said regulators need to meet in October to create a more robust global framework for crypto exchanges.

The report also found that about 5% of exchanges offer insurance on digital assets.

Inorganic Traffic Growth

June wasn’t a good month for crypto exchanges. As we reported, the volume dropped dramatically last month.

The same was the case for web traffic with Huobi losing the most – 31.7% between Q1 and Q2. Unlike other exchanges, OKEx saw an increase of nearly 240% in web traffic. Binance also saw a 9% increase.

“However, our research suggests that traffic growth for certain exchanges may be inorganic, as top traffic referrers were crypto ad or faucet sites,” said the quarterly report by CoinGecko for Q2 2020.

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Author: AnTy

CryptoCompare Created An Exchange Benchmark, Here’s Why

CryptoCompare Created An Exchange Benchmark, Here’s Why

As you may know, CryptoCompare created its own exchange benchmark. Why? The company recently posted in order to explain its decision.

According to the company, exchanges changed in many ways in the last few years, however, there was one aspect that called out everybody’s attention: fake volumes. More and more people started to affirm that most of the trading volumes were actually fake or manipulated.

The volumes were manipulated because many companies were actually involved in wash trading, which is basically the semi-illegal practice of trading with yourself to fake your volumes to look higher than they are.

This is why the Exchange Benchmark is an important tool, as it will help the company to create the trusted volume of the exchanges, which helps to address the fake volume issues. The technology uses a qualitative and quantitative metric which will show the adjusted trusted volume of exchanges.

CryptoCompare also explained that the issue with fake volumes started last year. After the crypto mania, trading volumes started to decline a lot. This made several companies see their quantity of users go down radically, which prompted them to fake their volumes in order to continue looking relevant in this scenario.

In fact, the low-value exchanges were the most with higher volumes when compared to 2017 exactly because they were faking them. The company correlated the spikes in trading with the value of BTC and the exchanges that passed the benchmark with high grades saw their trading went up as the prices did and down following the prices too.

The low-quality exchanges, however, saw their volumes spike a lot when the prices started to crash. Many of these exchanges appeared out of thin air during 2018. They are not as respected as Coinbase or Binance, just have high volumes, which are not even real.

Some of the bad exchanges, such as Coinbene and CoinEx, for instance, offered their tokens to traders. These tokens lost most of their value soon. They do not have a healthy business and they know it.

Binance, however, which uses its tokens to offer traders a chance to pay fewer fees, is only seeing the prices of its BNB tokens go up. Why? Because Binance does not have to fake volumes in order to be the most important exchange in the world.

The Bitwise report, which proved that most volumes were fake, was actually not that surprising for who was following the market during 2018. A certain collapse happened and many bad actors appeared. Companies with low volumes and suspicious of wash trading flourished.

Why use the benchmark? To give credit to the companies that deserve it. Not everybody is faking volumes and people have the right to know which are the companies that are.

The methodology enabled CryptoCompare to define which exchanges were engaged in healthy trading without needing to tie this to their rankings in rough numbers. The main page of the company was now also ordered by the grade of the companies, which goes from A to F, instead of their volumes.

The crypto market may be the victim of fake volumes from time to time, but it is also the truth that some companies are making an important effort to change this reality.

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Author: Gabriel Machado

BitMEX, Refinitiv and CryptoCompare to Collectively Create Real-Time Crypto Futures Metrics

BitMEX, Refinitiv and CryptoCompare to Collectively Create Real-Time Crypto Futures Metrics

BitMEX, known as a crypto derivatives platform, is set to unite with CryptoCompare to create a real-time crypto futures dataset. The companies are ready to create this product for new investors and to use the technology of Refinitiv, which is providing the base platform, together.

After the integration with Refinitiv Eikon (a set of software products focused on professionals who want to monitor markets in order to get the best results), the product is being set to make crypto markets more transparent.

The CEO of BitMEX Arthur Hayes is heading the initiative, which he believes that will be important in order to secure greater participation from institutional investors in the crypto world.

According to him, making good trading decisions depends heavily on solid data. If the investors do not have this kind of insight, they will often avoid these markets as they are seen as riskier than the other ones.

With the help of the new product, however, the company will be able to cater to this kind of investor better and will give them the confidence that they will need in order to be participants in this market.

CryptoCompare is another company which has a long-time interest in catering to this kind of investor offering data. They made a partnership with Thomson Reuters last year in order to provide an order book for 50 cryptos on the Refinitiv Eikon platform, of which the company was already a partner before this latest project was started.

The founder of CEO of CryptoCompare, Charles Hayter, has affirmed that the crypto market is ready to mature now and this will certainly bring all kinds of new investors, especially the institutional ones, which are often seeing as the most interesting type because they trade in large sums.

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Gabriel M