Is it possible that the marketcap of cryptocurrencies is overestimated and the reality is approximately 90% lower than estimated? The OpenMarketCap portal seeks to identify the real marketcap of the cryptocurrencies, excluding data from exchanges that do not prove the trades. Thus, he considers 10 institutions, including the well-known Kraken, Binance and Gemini.
Suspecting the truth of the transaction data presented by the exchanges may seem like a conspiracy theory. However, Yin Wu, founder of the DIRT Protocol, published an article in Medium presenting relevant arguments on the subject. According to the expert, the exchanges ranking “encourage” to lie about their volume of transactions. This is because firms with the highest volume of transactions gain prominence in portals that display rankings on them.
Considering only the reliable marketcap, the fall in the value of this metric is impressive. Most cryptocurrencies would have a more than 90% reduction in value. This is the case of bitcoin, which would suffer a reduction of 95% and of ethereum classic, with 97% reduction. However, the conclusion of Yin Wu’s article is that, even with the gigantic drop in the indicator, the largest cryptocurrencies still remain a strong market. The same does not happen with many small altcoins that would not have enough liquidity for the market.
See the 10 largest cryptocurrencies in marketcap:
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The Apocalypse scenario?
Although Yin Wu’s article presents strong arguments about the overvaluation of the marketcap, he disregards important issues. Considering only ten exchanges, Wu stipulates that the whole volume of transactions of the cryptocurrencies outside them is zero. However, this is far from true, since cryptocurrencies have a strong OTC market. In addition, there are cases of exchanges, such as LocalBitcoins, which already has a volume almost eight times greater than the Caracas stock exchange.