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A new study presented to the SEC by Bitwise Asset Management claims that 95% of the spot volume reported by BTC is false. According to Bitwise, only 10 stock exchanges have real volume … but that's not bad news for the bitcoin market.
95% of Bitcoin trading volume is wrong
The claims of washing trading and fake volumes are not new. Groups such as the Blockchain Transparency Institute are publishing more and more detailed reports on the issue. But the suggestion that 95% of the volume is wrong marks a new high (or low) point. The main reason for an exchange for a fake volume is to inflate the registration fees that it can charge.
1 / New search from us @ BitwiseInvest.
As part of the 226 slides to the SEC on the deposit of our ETF, we conducted an unprecedented badysis of * order book data * of all 81 stock exchanges reporting volume> 1 $ BTC on CMC.
TLDR: 95% of reported volume is wrong but MUCH good news! pic.twitter.com/TuXLlDCRyP
– Bitwise (@ BitwiseInvest) March 22, 2019
According to the study, only ten exchanges reporting an average daily volume of more than $ 1 million on CoinMarketCap are authentic. They are Binance, Bitfinex, Kraken, Bitstamp, Coinbase, BitFlyer, Gemini, itBit, Bittrex and Poloniex. The report excludes Korean trade and Cex.io pbaded the test, but reports a volume of less than $ 1 million.
Many exchanges do not even try to cover it
The presentation of the report gives a good comparison showing how to distinguish a real exchange from a suspicious exchange. When we compare the two side by side, some exchanges of counterfeiters appear blinding.
On a real exchange, the distribution between purchase and sale will be random; the amounts will be large and small, with a significant number of "rounded figures". Volumes will fluctuate over time, with more busy and calmer periods; and the gap (difference between the prices of buying and selling) will usually only be a few cents.
On the other hand, questionable trade often has trade that is done in pairs (a purchase and a sale). It is very unlikely that real exchanges will occur in this way. Transactions involve similar amounts, without very small transactions, or "rounded numbers", despite a human preference for rounded numbers.
Suspicious exchanges should have a greater extent, despite supposedly mbadive volumes. Volumes will remain roughly constant per period, or may eventually disappear completely for hours or even days.
This small market is "more orderly" for Bitcoin ETF
Bitwise has promised us good news. But, in reality, it is rather good news for them. Because this research was presented to the SEC in support of Bitwise's Bitwise Bitcoin app. The good news is that despite the fact that 95% of the volume is wrong:
The real bitcoin market is much smaller, more orderly and more regulated than is generally understood.
Well whoopee-doo! The bad news, of course, is that now, zany exchanges know how to tweak their robots to avoid detection.
Will this search for Bitwise have a positive effect on their Bitcoin ETF application? Share your thoughts below!
Images courtesy of Shutterstock
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