Assessing on basis of price spread and order book depth, the independent crypto analysts Crypto Integrity (CI) have rated and listed which exchanges they consider to be have most genuine price discovery, and therefore the most legitimate claim to set prices for cryptoasset markets in general.
The spirit of this analysis is the search for a superior way to measure a given exchange’s stature, importance, and honest trading - namely, superior to the commonly used metric of trading volume, which CI have thoroughly criticized.
They consider Coinbase Pro to be the best all around exchange for genuine trading, with Kraken and Bitstamp close behind. However, some exchanges are preferable for small (retail) trading, while others are for large (institutional) trading.
Notably, the popular Bitcoin derivatives exchange BitMEX uses pricing data from the three highest ranked exchanges from the CI research, in order to form its all-important index price: Coinbase Pro, Kraken, and Bitstamp.
Generally, CI analyze two metrics of cryptoasset exchanges to arrive at their conclusions: order book spread size (the range between the highest bid price and lowest ask price), and the volume of the order book (how much assets are actually listed for trading).
Analyzing the order book itself, CI say, is a superior method than looking at trading volume. This is because trading volume is not difficult to fake, and thus does not “[imply] a market risk for a fraudulent exchange.”
Putting actual orders on the book, instead, does constitute a risk for those trying to manipulate markets, as these asks or bids could actually be bought without a moment’s notice - probably not the intention of whoever is trying to sway the market one way or another.
Bitcoin Spike Likely Originated on Bitfinex
Order book depth is important for the stability of an asset’s price. If books are thin, prices can be more easily pushed up or down by large traders; if they’re thick, this is harder to do.
Employing this understanding - simplified here - CI conducted an analysis of Bitcoin’s momentous April 2 price explosion out of the critical $4,200 price ceiling.
Their observation is that price is generally most easily driven up on the Bitfinex exchange, and that it had “experienced several buyers’ attacks.”
CI conclude that “The spike on April 2, 2019, was likely to be originated on Bitfinex” - and asked in a speculation that now seems newly important considering yesterday’s news about Bitfinex and Tether, “Has it something to do with USDT (Tether)?" The full analysis, which is a good deal more complicated than contained in this overview can be found on Medium.