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What is the value of Bitcoin?There is little consensus in the fragmented market

Bitcoin enthusiasts agree that digital currencies have recently set a record. They disagree with the level of that milestone, or even when it is set.

Data provider Refinitiv hit a record $ 19,510 on November 25th. Research and news site CoinDesk hit a record high of $ 19,921 on December 1st. Another startup data provider, Messari, also hit a record high of $ 19,931 on December 1st. .. Other exchanges and data providers have their own numbers.

The collapse of the market has introduced new tools to help investors track fast-growing and volatile industries. As Bitcoin’s popularity has exploded again this fall, the S & P Dow Jones Index has stated that it will create a cryptocurrency index. Other companies have launched Bitcoin’s volatility index and tools aimed at becoming a Bloomberg screen in the crypto industry.

“This is the biggest problem with trading and we get its historical data,” said Anthony Denier, CEO of Webull Financial LLC, a trading platform that began allowing clients to trade cryptocurrencies last month. “Where do you get your data from? There is no NYSE, ICE, or Nasdaq that exactly matches all other providers.”

Bitcoin data discrepancies reflect the nature of the industry itself. Bitcoin and hundreds of other cryptocurrencies are traded on independent exchanges around the world. Every exchange maintains its own data feed, which consists of millions of transactions. Some are regulated and transparent. Others are notorious for unreliable volume numbers and fraudulent transactions.

In traditional capital markets, exchanges such as the New York Stock Exchange and the NASDAQ Stock Exchange provide large amounts of data to help investors evaluate each other, indexes, and the underlying assets of funds traded on the exchange. To do. It doesn’t exist in the crypto market.

Emerging companies such as Messari, CryptoCompare and CoinDesk have been trying to aggregate data within the industry for years, but as the market grows, traditional companies such as S & P are entering the market.

Earlier this month, S & P announced a partnership with crypto data provider Lukka to create a range of indexing products for cryptocurrencies. Although there are few project details, Peter Loffman, Global Head of Innovation and Strategy at S & P, said the company will launch some products early next year and will create other index product lines over time. I said it was planned.

He said that the main thing that currently exists is the market data feed, which is the average price of many exchanges. As a result, it is difficult to come up with an acceptable definition of fair market value.

“Our goal is to create transparency in the markets that investors are interested in,” he said. “What many people and organizations are unaware of is that cryptography is different from the traditional market.”

There are potential benefits to be gained by providing these services. The companies involved are making money by licensing the data to companies that use it to build financial products such as index funds. And as the Bitcoin market grows, so does the opportunity.

“The demand for data has increased significantly,” said Charles Hayter, CEO of London-based CryptoCompare. His company has licensed about 50 index products worldwide, and selling data makes about half of its revenue.

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Can Bitcoin sustain the growth seen this year in 2021? Why or why not? Join the conversation below.

This month, CryptoCompare launched a Bitcoin-based volatility index similar to the volatility index created by Cboe Global Markets. Co., Ltd.

Measure the volatility of a stock. This BVIX works much like the CBOE VIX. This is a measure of Bitcoin’s implied volatility based on options traded on European exchanges called Derivits.

Messari is another company that tried to sift unreliable exchanged data. We pulled data from 10 exchanges that were rated as reliable and created an index to build volume, price, and market capitalization numbers from them.

The company recently restructured its website to act as a comprehensive data feed for investors. We hope this will be the same for crypto investors as Bloomberg terminals for traditional investors.

“The question is whether to go to 20 different walled gardens to hunt, peck, collect, or become one portal.” Founder and CEO of Messari. Said Ryan Serkis.

Write to Paul Vigna (paul.vigna@wsj.com)

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What is the value of Bitcoin?There is little consensus in the fragmented market

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