Institutional investors rely on a select group of data providers

As countless startups enter the cryptocurrency market data space, The TRADE Crypto finds that institutional investors rely on a select group.

Over the years there has been a flood of startup firms providing market data all claiming to estimate the daily trading volume of cryptocurrency activity, but institutional investors are relying on a select group for information.

Demand for accurate data around transaction volume is growing. The US Securities and Exchange Commission (SEC) published a notice stating it is looking for businesses which can provide data for the most widely used blockchain ledgers based on transaction volume in order to monitor risk and improve compliance related to cryptocurrencies. 

Recently Bitwise Asset Management reported 95% of crypto trading volume is fake with “lots of good news”. With the crypto market being prone to abuse and misleading information the demand for reliable data is extremely high.

Maros Khula, project manager at Platon Finance, a cryptocurrency business providing insurance within the cryptocurrency space, agrees that there is a lot of fraud and fake data currently circulated in the crypto space. “There are many different [types of] software that is being built to provide credible data for the investors, not just the institutional ones,” said Khula.

According to one institutional investor there are a number of credible crypto data sources available for investors keen to access data for information and investment purposes.For example, Coin Metrics provides data downloads and charting tools for a variety of crypto-assets. The company was created in 2017 as an open source blockchain network data and analytics project and hired market data specialist Tim Rice as co-founding CEO. Most recently Fidelity Investments participated in a $1.9 million funding round for Coin Metrics.

Another popular service for crypto hedge funds and other market participants is Digital Assets Data which was founded in January 2018, and it is a FinTech and data company building enterprise-grade software and data feeds. The company is headquartered in Denver, Colorado.

There are also a number of start-ups focusing on niche parts of the market. For example Skew provides data on cryptocurrency derivatives and was launched by Emmanuel Goh, a former JP Morgan Chase derivatives trader. Tagomi which combines institutional-grade services with execution technology for trading digital assets is a start-up which secured backing from Peter Thiel’s Founders Fund.

Khula highlights CryptoCompare, a London based company that is providing thousands of real-time data of different cryptocurrencies, exchanges and trading pairs.  He adds, another credible data sources are platforms such as Nomics or Kaiko, which are the leading providers of institutional grade cryptocurrency market data.

“Kaiko that partnered with BSO Network in November 2018, to provide the real time market data with direct connectivity to clients from crypto exchanges. We should not forget about IPC Systems that works in the background, providing market data for some of the largest financial institutions in the world. Their data is updated 200 million times every day,” adds Khula.

He adds, for comparison, CoinMarketCap updates its data every minute which makes market data on IPC’s Connexus Cloud 15,000 times faster than the most popular price aggregator.

Accurate information is crucial for those looking to trade crypto and research tools luted above will come to play a huge role in where institutional investors will invest.