Crypto exchanges have recently encountered categories for constructed volume data. Because it is relatively easy to do so, market researchers are looking for other ways to measure the capacity of each exchange, and it is possible that the cold wallets held in each exchange may be one of them.
There are several ways to compile the rankings of cryptocurrency exchanges and the daily trading volume seems to be one of the most popular.
Top analytics platforms, like Coinmarketcap, ?ffer three trading volume metrics: Custom, Report-Based, and Liquidity.
Two days ago, the Bitcoinist website published the latest monthly review of the exchanges, conducted by Crypto Compare. The top trading exchanges in terms of volume were not as expected and little is known about the actual results.
HOW CAN ?HE COLD WALLETS HELP?
Longhash undertook a survey to investigate the possibility of cold wallets (held in each exchange) to provide better indications of the capacity and size of the exchanges. The results of analyzed those wallets addresses associated with large exchanges and large currency savings using information from chain.info. Because the data comes from analyzing cryptocurrencies, it would be quite difficult to be fake, as opposed to trading volumes.
The research first looked at Coinbase, as it has the highest holding of bitcoin currencies, which rose steadily last year, despite market v?latility. The exchange attracts more long-term investors, rather than traders on the daily turnover.
- The chart illustrates that Binance dominated 2019, as expected.
- Bitfinex, from March to October, appears to have lost its holdings in cold wallets, with a relative recovery near the end of the year.
- Huobi showed the strongest growth in cold bitcoin wallets during the year and climbed from fifth to the top.
- The other exchanges had a relatively flat course.
THE TOKEN PRICES IN THE EXCHANGES
The research then looked at the exchange rates of cryptocurrencies and whether there was a correlation with storage in cold wallets. The first three months of 2019 were positive for all exchanges, but only OKEx and Huobi ended the year with a positive sign.
The conclusion drawn from the report was that there was some correlation between the prices of the exchange and the cold wallets it adheres to, but does not appear to be a determining factor. In particular, it concludes that:
Even though storing coins in cold wallets is not the perfect measurement method for evaluating stock exchanges, it is an interesting piece of information that can be added to data from other sizes (customer numbers, volume of transactions and revenue) so that each customer can form a better picture of the size and quality of the exchange through which they are traded.
It is certain that this measurement (the amount of stocks in cold wallets) is more accurate than the quoted volumes reported from time to time by some completely unknown exchanges.