How Binance’s Acquisition Will Affect CoinMarketCap
CoinMarketCap is one of the first interfaces users interact with while discovering the cryptocurrency ecosystem. The data provider was recently acquired by Binance, and as a result, its ability to remain independent is being called into question. CoinGecko’s Bobby Ong doesn’t believe CoinMarketCap can be considered independent anymore, as told to My Two Gwei, April 7, 2020.
Is CoinMarketCap Independent?
CoinMarketCap was already caught on the wrong side of data manipulation allegations. Now, with the largest retail crypto exchange acquiring them, their independence can be ruled out.
Both companies dismiss this narrative, with Changpeng Zhao, CEO of Binance, stating that CoinMarketCap will continue to run as a separate business – not integrated with Binance.
However, Bobby Ong, CEO of CoinGecko, doesn’t believe it is likely. In a candid interview with Dex Blue, Ong offered his insight on what CoinMarketCap’s acquisition means for their status as an “independent data aggregator”:
“$400 million is a big sum. It’s one of the largest M&A in crypto so far and matches the Poloniex acquisition. It clearly highlights the strategic position of crypto data aggregators. After this acquisition, I think it will be hard for CoinMarketCap to stay neutral and independent so we are now the largest, independent crypto data aggregator on the market.“
Data Integrity in Crypto
Bloomberg and Reuters are the gold standard for data in legacy finance. This data invariably makes it way down to retail platforms, offering some amount of free insight for smaller fish.
This dynamic is only somewhat recreated in crypto. Each data provider has their own methodology. Free services like CoinMarketCap and CoinGecko have different degrees of reliability.
CoinMarketCap was previously considered a relatively shady data provider, and the Binance acquisition aids that narrative now. CoinGecko and Nomics remain amongst a small group of independent providers with easy interfaces for new users in crypto.
However, CoinMarketCap’s reach is far beyond any of its competitors. So they are unlikely to catch up on independence alone. Binance has been true to its word for the most part, so hopefully, CoinMarketCap remains independent in terms of data aggregation at least. Given the variety of competition, any falsified data from CoinMarketCap can be easily caught on to by other sources.