A deep research run by CoinDesk’s analysts revealed systemic defects in cryptocurrency exchange data that experts often use to value the market trends. It turns out that Japanese yen traditionally indicated by CryptoCompare & Coinhills as dominant currency traded for BTC is critically overestimated. The experts collected their own data and figured out that US dollar dominates by a large margin while the popular data aggregator sites until recently informed users about yen domination over 50%.
It appears that most Japanese yen for Bitcoin transactions don’t refer to so called spot trades when actual financial instruments are traded immediately. Vice versa, they involve derivative products which contracts use yen and Bitcoin as underlying assets.
It means that both sides of such transactions call on the Bitcoin price but, in fact, there is no move of any assets. On one hand, derivative contracts don’t break any laws, on the other hand, the analytics sites mix up derivative and spot trading and, no doubt, it makes data rather misguiding.
CryptoCompare and Coinhills are extra prestigious data resources. They are wide-cited by Bloomberg as well as the Wall Street Journal. And while they dared to combine different types of volume for the biggest exchange of Japan, yet they both until recently neglected dollar-denominated derivative trades, for instance, on Bitmex.
In this case, it is absolutely incorrect to compare yen and dollar volumes, since yen totals include derivative instruments whilst dollar totals don’t. The homogeneous classification proposed by CoinDesk’s experts completely changes the picture.
Actually, after CoinDesk reported about the flaws, CryptoCompare transformed the approach and for now the site performs dollar traded for Bitcoin as more popular compared to yen.