Bitcoin enthusiasts agree that the digital currency recently set a record. What they disagree on is the level of that milestone, or even when it was set.
Data provider Refinitiv hit an all-time high of $ 19,510 on November 25. Research and news site CoinDesk hit the high of $ 19,921 on December 1. Another startup data provider, Messari, also hit the high of $ 19,931 on December 1. Other exchanges and data providers have their own numbers.
The fragmented market has led to the introduction of a new suite of tools designed to help investors keep track of the burgeoning, volatile industry. With Bitcoin gaining popularity again this fall, S&P Dow Jones Indices announced that it would create cryptocurrency indices. Other companies have launched a bitcoin volatility index and a tool that will serve as the crypto industry’s Bloomberg screen.
“The biggest problem for trading is getting this historical data,” said Anthony Denier, CEO of the trading platform Webull Financial LLC, which has been enabling its customers to trade cryptocurrencies since last month. “Where do you get the data from? There is no NYSE, no ICE or Nasdaq that can keep up with any other provider. “
The discrepancies in the Bitcoin data reflect the nature of the industry itself. Bitcoin and hundreds of other cryptocurrencies are traded on independent exchanges around the world. Each exchange maintains its own data feed that contains millions of trades. Some are regulated and transparent; others are notorious for unreliable volume counting and fraudulent trading.
In traditional capital markets, exchanges such as the New York Stock Exchange and the Nasdaq Stock Market provide databases that help investors evaluate the underlying assets of mutual, index, and exchange-traded funds. There is no such thing in the crypto market.
Startups like Messari, CryptoCompare, CoinDesk and others have been trying to aggregate data within the industry for years, but as the market grows, traditional companies like S&P are stepping in.
S&P announced a partnership with crypto data provider Lukka earlier this month to develop a range of indexing products for cryptocurrencies. Although details on the projects are scarce, Peter Roffman, global director of innovation and strategy at S&P, said the company plans to launch a few products early next year and add more product lines over time.
Currently there are mainly market data feeds showing average prices on a number of exchanges. This makes it difficult to find an acceptable definition of market value.
“Our goal is to create transparency in markets that investors are interested in,” he said. “I think a lot of people and organizations don’t know that crypto is different from traditional markets.”
Bitcoin’s price is skyrocketing, fueling a rally in momentum trading that has propelled its value higher than ever. WSJ explains how Bitcoin trading works and why the volatile digital currency is making all-time highs. Image: Jacob Reynolds / WSJ
There is a potential profit to be made by providing these services. The firms involved make money by licensing the data to companies that they use to build financial products such as index funds. And as the Bitcoin marketplace grows, so do the possibilities.
“The demand for data has increased significantly,” said Charles Hayter, CEO of CryptoCompare based in London. His company licenses about 50 index products worldwide, and data sales generate about half of its sales.
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This month, CryptoCompare launched a Bitcoin-based volatility index, similar to the volatility index created by Cboe Global Markets Inc.
Measure volatility in stocks. This BVIX works similarly to the VIX of the CBOE. It’s a measure of Bitcoin’s implied volatility based on options trading on a European exchange called Deribit.
Messari is another company that has tried to weed out unreliable interchange data. An index was created that draws data from 10 stock exchanges that are classified as reliable and uses them to generate volume, price and market capitalization figures.
The company also recently redesigned its website to serve as a comprehensive data feed for investors of what is to become to crypto investors what the Bloomberg terminal is to be to traditional investors.
“The question is, will you go into 20 different walled gardens to hunt and peck and forage, or will it be a portal?” Said Ryan Selkis, Founder and CEO of Messari.
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