Cryptocurrencies with less than US $100,000 in daily exchange volume are among the top 50. Indiscriminate information published by CoinMarketCap is not the best source to analyze the market.
CoinMarketCap is an extensive database of the more than 2,440 currently existing crypto assets, including information on market capitalization and exchange volume, among other data. Although it is a reference in the cryptocurrency ecosystem, the information that it publishes is not entirely reliable.
The figures presented on Bitcoin and other large crypto assets are similar to their real volumes. However, those on small cryptocurrencies are inaccurate, a little unclear, with insignificant daily exchange volumes, despite having a large market capitalization. This is shown in important purchasing peaks, which suggests strength and interest in the project in question, although it is not really true.
The problem is also observed among the first 100 cryptocurrencies in the CoinMarketCap list, which are mistakenly seen as “investment opportunities.” Unsuspecting/unacquainted or inexperienced investors might consider that these cryptocurrencies, which are among the most capitalized, could offer a good return. Consequently, they would be trapped in liquid currency and market positions.
Low Liquidity with High Capitalization?
These cases of low liquidity cryptocurrencies, but with huge capitalization, seem especially striking. Energi (NRG), for example, with a market capitalization of US $137,650,881, is located at position 47 of the CoinMarketCap list.
However, Energi’s daily exchange volume does not even reach 1% of this figure, so the current price of US $7.04 has been reached with just US $847,825. In addition, with only 77.70 BTC of daily exchange, it is among the top 50 cryptocurrencies in the market, offering an investment option that might not be as successful as the information suggests.
The cryptocurrency aims at leading worldwide market by unifying smart contracts, governance and self-financed treasury to guarantee longevity and allow rapid growth. Other projects have a better technical capacity to do this, so the future value of this cryptocurrency may not be enough, despite being among the 50 most capitalized projects, with US $137,650,881.
Another similar case is Bytecoin (BCN), which ranks 52nd according to CoinMarketCap. However, when comparing the information on the daily exchange volume, it is observed that the cryptocurrency has barely mobilized US $12,234 in the previous 24 hours, which is equivalent to a little over 1.12 BTC at current market prices.
On the other hand, BitUSD (BITUSD) also shows some especially strange behavior, since its current price went from more than US $22 to US $6 in a few hours. Its volume also went from US $1,000 to over US $22,000 in a matter of hours, between August 11th and 12th. Even so, CoinMarketCap does not seem to revise the information to offer accurate data on this fact to potential investors. It simply reports it, adding the cryptocurrency to the 100 most capitalized, despite this is a market of just 0.34 BTC.
Among the cryptocurrencies with strange information are Clipper Coin (CCCX), ICE ROCK MINING (ROCK2), DPRating (RATING), Birdchain (BIRD), and Touchcon (TOC).
It is better to base decisions regarding investment in cryptocurrencies on the use of other references, which deal with information and data differently. Users can examine the operation of a particular project by seeking information about it directly in a block explorer. Using only CoinMarketCap data is not enough.
By Willmen Blanco