What is CoinGecko Used For?
CoinGecko is extremely popular with institutions, individuals, and stakeholders in the decentralized finance (DeFi) space that source data from the crypto portal to make financial decisions.
Launched in 2014 by Chief Operations Officer Bobby Ong and Chief Executive Officer TM Lee, CoinGecko simplifies fundamental analysis of the digital asset market.
Aside from tracking price, trading volume, and market capitalization, CoinGecko tracks on-chain metrics, major events, open-source code development, and community growth.
As one of the earliest and biggest data aggregators in the stratosphere, CoinGecko takes a more holistic approach to tracking digital tokens and cryptocurrency platforms. As of July 3, 2022, the data aggregator tracks approximately 13,372 coins and around 514 exchanges.
The primary reason for creating the data fusion portal was to elevate the understanding of the fundamental factors driving the crypto markets for novice and experienced traders.
Speaking about market manipulation, Ong told Coin Rivet that many market participants believe market capitalization is a great way of measuring the worth of a cryptocurrency.
Unfortunately, he thinks it is wrong since the actual worth of several digital assets is highly manipulated due to a lack of transparency in accurately tracking cryptocurrencies.
CoinGecko delivers a comprehensive analysis of the digital currency market
To separate itself from the herd, the data-aggregating portal not only measures exchanges by trading volume, coins, and tokens by market capitalization, it also tracks other factors that impact crypto projects. Some of these factors include, but are not limited to, community growth, open-source code development, and a project’s code progress.
For the community, CoinGecko tracks new posts, comments, Reddit subscribers, Facebook likes, Discord members, Telegram participants, and Twitter followers.
For statistics on development, the aggregator tracks Gitlab, Bitbucket, and Github. The data fusion portal has an in-depth look at pull requests, forks, stars, lines added/deleted, and the number of commits.
This helps blockchain enthusiasts and decentralized finance fans get a comprehensive view of the development activity in a particular crypto project's ecosystem.
More importantly, CoinGecko gets a 360-degree overview of cryptocurrencies it tracks by measuring developer stats and community. The platform’s in-depth analysis helps potential and existing investors get more qualitative facts about alternate coins (altcoins), especially so that they can consider other factors aside from market capitalization in making trading decisions.
CoinGecko's in-depth analysis goes beyond trading volume
Trading volume plays an instrumental role in fundamental and technical analysis. In fundamental analysis, when the volume is high, the price of a particular asset follows, and vice versa.
Trading volume also plays an essential role in the use of technical analysis to make forecasts about the possible price patterns of a coin in the short, medium, and long term.
In early 2019, Bitwise Asset Management submitted its Bitcoin Exchange Traded Fund (ETF) proposal to the US Securities and Exchange Commission (SEC).
The proposal included a study that pointed out that about 95% of the trading volume reported by several cryptocurrency exchanges was false. Although data provided by well-regulated centralized exchanges (CEXs) were deemed trustworthy, trading volume data by some CEXs and decentralized exchanges (DEXs) was manipulated due to their unregulated nature.
After launching its quarterly cryptocurrency report in October 2017, the launch of a daily newsletter, free public application programming interface (API), and the official iOS and Android application (Coingecko app) followed in 2018.
To combat false exchange volume data, CoinGecko launched the Trust Score in May 2019.
CoinGecko’s Trust Score ranks cryptocurrency exchanges
With fake statistics, it is not good for individual whales and institutional investors to make trading decisions based on just volume. With the Trust Score, there is a combination of normalized volume from exchanges using order book and web traffic analysis.
With the measurements of these metrics, there is a more accurate overview of the true liquidity of any cryptocurrency pair on an exchange. CoinGecko has introduced additional metrics such as API quality evaluation, crowd-sourced reviews, social media data, cybersecurity analysis, hot and cold wallet analysis, and trade history analysis.
In an unregulated market that has largely become saturated with new projects, CoinGecko continues to play an invaluable role in giving stakeholders a reliable source of information. Dogecoin (DOGE) is among the coins it tracks.
Author: Raphael Minter
Raphael Minter/ Albert Zuhnden (preferred pen name) is a crypto finance writer, data miner, and fundamental analyst. Raphael has written hundreds of articles about centralized and decentralized financial instruments such as precious metals, commodities, stocks, and cryptocurrencies. He broke into digital finance in 2016 and believes digital assets and blockchain technology is the future of finance.