Cryptocurrency value

Correlation Between Cryptocurrency Value and Exchange Lists: Expert Blog

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There is a positive correlation between the value, or market cap, of a cryptocurrency and the number of exchanges it is listed on. For the first 1,000 cryptocurrencies, the correlation is greater than 50%. Analysis of rudimentary data indicates that the market capitalization of the coin or token increases roughly with stock quotes. However, correlation is not causation and it is not wise to conclude that just listing a cryptocurrency on more exchanges always adds more value to the cryptocurrency.


Correlation explains how closely two variables are related. A 100 percent correlation would mean that the positive change in one variable is perfectly related to the positive change in the other variable. If the correlation between the value of the cryptocurrency and the stock quotes was 100%, then it would be possible to observe an exactly proportional increase in market capitalization with an increase in the number of stock quotes.

Since the correlation is above 50%, it can be tempting to register on as many exchanges as possible to maximize the value of the token. Don’t be tempted. Even though market capitalization and stock quotes are somehow linearly correlated, that doesn’t mean that listing on more exchanges definitely leads to an increase in market capitalization. Especially when a little more analysis reveals the presence of major outliers.


Thanks to Coin Market Cap API it’s easy to see outliers in the top 1,000 cryptocurrencies. Clear market cap and trade data in Google Sheets or a RStudio dataset helps explain a lot of things. The plot of the value against the lists shows that cryptocurrencies like Bitcoin are not normal compared to the majority of other cryptocurrencies.

Tracing the log of market capitalization against listed exchanges reveals about three different value groups in the cryptocurrency world.

Clusters of value

The first cluster includes Bitcoin, Litecoin, Ethereum, and Bitcoin Cash. This group of cryptocurrencies are all listed on over 75 exchanges. The second group of cryptocurrencies is scattered between 15 and 55 exchange lists. The second includes DASH, Ripple, ZCash, and popular cryptocurrencies. Finally, the vast majority (~ 98%) of cryptocurrencies have 15 or fewer exchange lists.

Statistical summaries show that the median cryptocurrency is listed on only two exchanges and the average is listed on just under four exchanges. Using a boxplot to graphically describe the data shows the large number of outliers compared to the majority of cryptocurrencies.

Boxplot of exchange lists

Box Plot of exchange lists. Data obtained from December 10, 2017.

In general, major outliers largely function as a medium of exchange and store of value. To have global value as intermediary instruments used to facilitate the buying, selling or trading of goods and services, these cryptocurrencies should be listed on as many exchanges as possible. Currencies generally have more legitimacy the more they are used, and listing on many exchanges advances these network effects.

Any outliers present in the dataset are not money. Ethereum is an exception. Although it was designed for a different purpose, the market decided that it should also function as a medium of exchange and a store of value.

There are other exceptions in the first and second groups of cryptocurrencies. Qtum and TenX were also not intended as exchange mediums, but they are listed on more than 15 exchanges.

Strategic implications

Despite these outliers, analyzing the relationship between value and exchange listings has implications for cryptocurrency strategy. Dividing cryptocurrencies further into subsets and rerunning the analysis provides more meaningful information to strengthen or redirect the intuition of a cryptocurrency strategist.

Knowing that outliers are primarily used as stores of value or medium of exchange, it makes sense to list them broadly if you plan to compete with cryptocurrencies used as currency. There are always exceptions. However, if the purpose of a cryptocurrency is to be a better form of money, it may need to be widely listed in order to compete with other heavily rated currencies.

For example, cryptocurrencies competing to be a medium of exchange in Venezuela can increase their market capitalization by listing on a Venezuelan cryptocurrency exchange. With each entry into a new geographic market, it could experience additional increases in value.

This may not be the case with tokens. Since tokens are typically an asset, the economics of valuation with respect to stock quotes may be different. Being listed on a Venezuelan stock exchange may add no value.

Security tokens may observe increased market capitalization with stock market quotes, as investors will appreciate more options for trading if there are issues on one of the major centralized exchanges. However, there will most likely be diminishing returns to increasing exchange listings.

The long tail

Focusing on cryptocurrencies with less than 15 listings makes sense to get a rough idea of ​​the relationship between value and exchange listings for medium tokens. This subset is the third group of cryptocurrencies. They represent over 97% of the top 1,000 cryptocurrencies. This cluster also includes cryptocurrencies, like IOTA and NEM, which are not tokens but are highly regarded and listed on fewer exchanges than their peers.

Histogram of exchange lists

Top 1000 cryptocurrencies [Data Source:]

Graphically, using a histogram, it is possible to observe the concentration of cryptocurrencies. The chart exposes the first and second clusters as long-tail cryptocurrency exchange listings.

Focusing on the third group shows that the linear correlation between market capitalization and stock quotes drops to 20%. This means that it might not really matter how many exchanges the average token is listed on. The correlation between the average value of the token and the stock market quotes is not very significant.


The ICO is becoming an increasingly popular fundraising vehicle. Traditional businesses are starting to turn to this crowdfunding mechanism and are bypassing other traditional forms of funding.

Nevertheless, planning an initial coin offering requires a lot of thought and careful research. Even deciding which exchanges to enroll on and how many exchanges to enroll on requires careful research. Fortunately, there are already hundreds of cryptocurrencies that can help determine if it’s worth the time and effort to pursue a certain strategy.

There is a correlation between market capitalization, but it is not very strong. Let yourself be guided by this. If in doubt about correlation and causation, just look at Litecoin and Bitcoin. Litecoin is listed on 94 exchanges compared to 88 for Bitcoin, but Bitcoin’s market capitalization is much larger.

Munair simpson is a business strategist and principal researcher at Useful Coin Research. Munair lives in South Korea and enjoys teaching capoeira when he’s not thinking about the future of finance. Munair graduated from The Wharton School with an MBA in Marketing.

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