CMC200 and CMC200EX. CoinMarketCap Indexes and why I do not trust them.15th June 2019
In March CoinMarketCap has announced CMC200 index and CMC200EX dexes. A lot of media made attention to this occurrence when CMC200 was published on NASDAQ.
After this occasion was followed by growth to cryptocurrency from the “whales” and the rate went up. But many curiosity investors remember the news about the fake volume on CoinMarketCap. And of course, we are as investors should check out it, right?
Why CMC200 and CMC200EX are not indexes.
Firstly, let’s start with the fact that indexes included fake volumes cannot be correct indexes. Why? The answer is very simple. For example, you made 500.000.000 tokens and placed them on any small exchange. If one token is equal $1, then the capitalization of your token will be equal to $ 500.000.000, and now you are in the TOP-100 at CoinMarketCap. Easy, eh?
P.s I very doubt that Qubitica has volume more than $125 000 000.
Secondly, tokens that are in the range of 150–200 places often change their positions. Fact. You can check out it in web.archive.
Thirdly, there should not be any stablecoin in a full-fledged cryptocurrency index, and there are 4 (Can you imagine, CARL?) stablecoins In CoinMarketCap indices. It’s more like a portfolio, not an index.
Let’s analyze the methodology
And #herewegoagain they suggest us to using capitalization of cryptocurrency as the main factor. What???
So now we can conclude that they use the same method as in crypto winter when all crypto market crashed and capitalization was maintained at the proper level, due to the listing of a large number of new coins(With fake volume). Of course, then they delisted them. (Not all)
For example, I use CIX100, where I know their methodology without any manipulation with fake volumes.
This index cannot include a coin with a fake volume because:
- If the coin has not been set in the TOP-200 within 3 months — the coin cannot be included in CIX100. This eliminates the risks of quickly entering and departing coins.
- If a coin/token is traded on one exchange only — the chances to be in CIX100 is very low.
- If there is no activity in GitHub, then getting into the TOP-200 CMC will not allow the coin to be in CIX100.
Next example — Huobi 10 index.
Huobi index is better than CMC because of :
- The index will reflect only the overall performance of Huobi Pro market, not CMC;
- Everyone can identify the most liquid assets traded on Huobi.pro, and will not have to check the rates of individual crypto-currencies.
In my opinion: Those indexes are much better than CMC which use only market capitalization that isn’t correct.
The arrival of classical stock tools on the cryptocurrency market has had a favorable climate for newcomers, traders, and “whales”. Cryptocurrencies are gradually emerging from the “grey sector” and are beginning to be actively used in the real sector.
Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Please do your own homework.
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CMC200 and CMC200EX. CoinMarketCap Indexes and why I do not trust them. was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.