Acquisition of the largest market data aggregator is imminent
As The Block wants to know, the takeover of CoinMarketCap by Binance is nearing completion. The talks are in the final phase. Accordingly, Binance is willing to pay up to $ 400 million for this acquisition. The deal is expected to be announced this week. If so, it is reasonable to assume that the rumors could be correct. The deal could be one of the largest acquisitions in crypto history.
Largest takeovers in crypto space so far:
If the deal is announced as expected, this takeover will rank alongside the takeover of Poloniex by Circle in terms of the amount. That would make both acquisitions $ 400 million, the highest acquisitions in crypto history.
In a letter to the Binance community that appeared at the end of January this year, Binance’s CEO wrote that he was very excited about two very significant acquisitions. This acquisition may be one of them. It remains to be seen which further takeover will be announced this year. Binance had previously managed to enter into a partnership with Brave, which enables the integration of a Binance widget into the browser.
Binance on the overtaking course
It can also be seen from the letter to the community that Binance processed at least 9 acquisitions in 2019, only a few of which were made public.
Binance is no longer just the Binance.com stock exchange. The company is constantly expanding the product range. For example, Binance.com has long since been able to do more than just traditional cryptocurrency trading. The platform also offers: Binance Futures, Spot & Margin Trading, Binance Lending and Binance Staking. So you can earn money with your coins in all sorts of ways.
But it’s not just Binance.com that is growing. The crypto giant is also expanding other sales channels. Due to legal requirements, Binance has geographically specific domains, such as Binance Jersey, which is explicitly intended for the EU area or Binance US for the US market. There is also a decentralized exchange, namely Binance DEX. There is no detailed list of other platforms at this point.
The market data aggregator is a platform that was created to monitor data from cryptocurrencies. So it is possible to see the market capitalization of different cryptocurrencies, trading volume of the cryptocurrencies and of course the price of the respective cryptocurrency.
Almost everyone who deals with cryptocurrencies knows coinmarketcap.com. According to similarweb.com, Coinmarketcap receives an average of more than 37 million visitors a month. In contrast, Binance has just under 23 million.
Monthly visitors to Coinmarketcap.com
Monthly visitors to Binance.com
So one explanation why CoinMarketCap would make sense for Binance is the high traffic. Binance could use sensible marketing measures to forward the traffic from CoinMarketCap to its own website. It may be the main reason, but another point could also be important when taking over.
The data from CoinMarketCap could also be useful
CoinMarketCap aggregates a lot of data from a lot of exchanges. Binance could use this data. Most of the data is publicly available, but Binance has made it easier for them to access the data. This would make it easier for Binance to evaluate the competition’s data.
Coinmarketcap.com no longer independent?
A problem that could arise with this acquisition is the lack of independence at Coinmarketcap after the takeover. So far, there have been speculations that some exchanges are artificially pushing up their trading volume. For this reason, CoinMarketCap introduced a new metric at the end of last year to counteract the manipulation. This metric should allow a more precise statement about the 24-hour trading volume of a crypto exchange and its assets. The liquidity was chosen as the metric. This measure was necessary after increasing doubts about the trading volume.
Assume Binance takes over CoinMarketCap: So how independent is a platform that discloses the numbers of all exchanges as best as possible, but is itself operated by one of these exchanges? At least it raises doubts.
Other market observers also have some doubts, such as Eugene Ng, Matrixport’s sales manager:
Who would ever trust @CoinMarketCap after this, doesnt make sense. A stake from @binance might likely work better than an acquisition, just defeats the purpose of having a balanced and neutral index aggregator. https://t.co/TmqN7638OJ
— Eugene Ng 🌊 (@Eug_Ng) March 31, 2020
The acquisition could give Binance in particular a further push to differentiate itself from the competition. Binance could benefit from CoinMarketCap’s large number of visitors. Binance would also benefit from the backlinks and live data from all exchanges. There is also a lot of technology behind the data aggregator. Binance not only takes over a platform on which the current prices of cryptocurrencies can be viewed, but rather the know-how behind it, such as artificial intelligence and machine learning.
The dubious neutrality of CoinMarketCap after the takeover remains critical.
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