Uploaded by: Knoema
Accessed On: 10 May, 2016
Launched in September 2013, the CoinDesk Bitcoin Price Index (XBP) represents an average of bitcoin prices across leading global exchanges that meet criteria specified by the XBP. It is intended to serve as a standard retail price reference for industry participants and accounting professionals.
The criteria for inclusion in the XBP are:
1. USD exchanges must serve an international customer base.2. Exchange must provide a bid-offer spread for an immediate sale (offer) and an immediate purchase (bid).3. Minimum trade size must be less than 1,500 USD (9,000 CNY) or equivalent.4. Daily trading volume must meet minimum acceptable levels as determined by CoinDesk.5. Exchange must represent at least 5% of the total 30-day cumulative volume for all of the exchanges included in the XBP.6. The stated and/or actual time for a majority of fiat currency and bitcoin transfers (whether deposits or withdrawals) must not exceed two business days.
Currently, these bitcoin exchanges meet the criteria and are therefore included in the US dollar XBP calculation: Bitstamp, Bitfinex, Coinbase, itBit, OKCoin. The following exchanges are included in the Chinese yuan XBP calculation: BTC China, Huobi, OKCoin.
The main features and criteria are as follows:
1. The CoinDesk XBP is a simple average of leading XBT/USD and XBT/CNY exchange prices.2. The XBP is expressed as the midpoint of bid/ask spread.3. New index historical data commences on 1 July 2013.4. Prior index historical data is obtained via Mt. Gox.
The decision to apply a simple average, as opposed to a volume-weighted average, for the CoinDesk XBP was made because the bitcoin market currently lacks sufficient depth and regional liquidity.
Since trading volume now favors particular regions, a volume-weighted approach would not act as a proper global indicator, because each international bitcoin exchange is not equally available to all national trading participants.
A simple average does not favor a regional exchange with high volume and ensures that the XBP is meaningful for the largest number of market participants. Also, a simple average approach minimizes the impact of volume irregularities and accidentally excluding an exchange.
As overall liquidity improves and the number of global exchange choices increases, the impact of regional variances should diminish and a volume-weighted approach may become more appropriate.