Two New Services Could Help Investors Rate Cryptocurrencies

Increasing interest in cryptocurrencies has led to an influx of new investors. Unlike traditional markets, there are few tools that can help people make informed decisions, a situation that has already begun to claim victims in a particularly volatile environment.

In separate announcements, Weiss Ratings and Intercontinental Exchange (NYSE: ICE) have announced the introduction of new financial tools to help investors navigate the cryptocurrency market and make smarter investments.

Weiss Ratings, an established independent rating agency of financial institutions, says they will begin issuing ratings for cryptocurrencies on January 24, 2018, to help investors make informed decisions.

ICE, an operator of a network of global futures, equity and equity options exchanges, is partnering with blockchain technology provider Blockstream to launch the Cryptocurrency Data Feed (CDF).

Weiss Ratings Takes On Cryptocurrencies

Founded in 1971, Weiss is an independent rating agency of financial institutions. They will begin issuing letter grades for cryptocurrencies including Bitcoin, Ethereum, Ripple, Bitcoin Cash, Cardano, NEM, Litecoin, Stellar, EOS, IOTA, Dash, NEO, TRON, Monero, Bitcoin Gold and many others.

According to Weiss Ratings founder Martin Weiss, the data they are using is a combination of purchased data and data collected through other sources. It is updated on a daily basis, covering a sliding 12-month window.

Regressive testing to verify past data that the company uses to confirm predictions is still ongoing, but results have been accurate thus far, Weiss told Bitcoin Magazine.

“We have built an analytical technology over the years using intelligent models to replicate the real world and we are applying [these] to cryptocurrenc[ies]. These have been very accurate for many years.”

Ratings are built up across multiple indexes. The company built new models to reflect cryptocurrency data and developed an overall grading system that is broken down into four separate sub-models:

1. Risk Index — The level of risk involved in the investment, based on factors like price activity and volatility.
2. Reward Index — The potential reward outcome, based on historical patterns of buying and selling.
3. Technology Index — A primarily manual process, where company analysts review the source code and white papers, analyze price movement and make ratings in a Query Tree (their internal software) to generate a quantitative result.
4. Adoption Index — A measurement of adoption along two dimensions: how broadly it is adopted, transaction speed, settlement times, etc.

“A weighted average of those 4 indices is used to get the final grade,” said Weiss. “The goal at Weiss is to empower the investor to make prudent decisions.”

ICE Data Services: Real-Time Trading Data

The Cryptocurrency Data Feed (CDF) is a multi-asset and multi-venue data feed, capturing nearly 80 percent of cryptocurrency exchange trading volume over more than 15 exchanges around the world. It measures leading cryptocurrencies against the U.S. dollar and other major currency pairs.

The captured data is normalized to create a unique number sequence to identify the transaction, details of where the trade took place, quantity, price, currency, timestamp and other relevant order book data. This is designed to enable ICE Data Services’ customers to receive global market–representative trading data in a real-time feed with high-quality information.

“With the broad array of cryptocurrencies and exchanges, and given the price variances between exchanges, it’s critical that investors have a comprehensive source of pricing information,” said ICE Data Services President and COO Lynn Martin in a statement.

According to Blockstream SVP of Business Affairs Alex Fowler, the initial exchange partners set up through cooperative agreements include Bitbank, Bitfinex, BitMEX, Bitso, Bitstamp, BtcBox, BTCC, CEX, Coinfloor, Coincheck, itBit, GOPAX, OKEx, SurBTC, The Rock Trading, Unocoin, Vaultoro and Zaif, with more coming soon.

The data is collected using the exchanges’ APIs and, in some cases, by setting up dedicated connections with them. The current feeds lack standardized formatting and information: part of what ICE is providing is a single source that consolidates and standardizes the data, which will average out the information from the multiple sources into a more accurate overall view.

Historically, the data currently only goes back to the initial integration; however, Blockstream is working with the exchanges to try and incorporate older data as well.

Fowler told Bitcoin Magazine, “We believe that a consolidated data source, resulting from the combined participation of a strong and growing list of exchange partners globally, will enable us to address these gaps and thereby promote better liquidity, price stability, and public confidence in cryptocurrency as asset class.”

CDF will include bitcoin and a wide range of cryptocurrencies and currency pairings on launch; the final list will be on their website. ICE will develop and publish a selection of criteria for decisions on the addition and/or removal of assets in the feed. This will be an ongoing process as the market evolves. Access to the real-time CDF will be available to subscribers of ICE Data Services’ Consolidated Feed in March 2018.