New research presented to the SEC by Bitwise Asset Management argues that 95% of the reported BTC spot volume is false. According to Bitwise, only 10 stock exchanges have real volume … but that's not all the bad news for the bitcoin market.
95% of Bitcoin Exchange Volume is false
Claims on laundry and false volumes are nothing new. Groups such as the Blockchain Transparency Institute have published increasingly detailed reports on the problem. But the suggestion that 95% of the volume is false marks a new high (or low) point. The main reason for an exchange for false volume is to inflate the listing fees it can charge.
1/ New research from us @ BitwiseInvest .
As part of 226 images presented to the SEC on our ETF filing, we made a first-class analysis of * order book data * from all 81 exchanges that reported> $ 1M in the BTC volume of CMC.
TLDR: 95% of reported volume is fake but much of good news! pic.twitter.com/TuXLlDCRyP
– Bitwise (@BitwiseInvest) March 22, 2019
According to the survey, only ten exchanges reporting over $ 1 million average daily volume on CoinMarketCap are genuine. These are Binance, Bitfinex, Kraken, Bitstamp, Coinbase, BitFlyer, Gemini, ItBit, Bittrex and Poloniex. The report excludes Korean exchanges, and Cex.io passed the test but reported below the $ 1M volume.
Many exchanges do not even try to cover it
The report presentation provides a good comparison that shows how to tell about a real change from a suspect. When comparing the two side by side, some substitutes appear dazzling.
On a genuine stock market split between buying and selling will be random; the amounts will be both large and small, with a significant number of "round numbers". Volumes will fluctuate over time, with more lively and quieter periods.
On the other hand, suspected exchanges often have deals that come in pairs (a purchase and a sell). It is very unlikely that real business would occur in such a pattern. The merchants are for similar amounts, not very small business, and no "round numbers" trade, despite a human preference for round numbers.
Suspected exchanges are likely to have a higher spread despite probably massive volumes. Volumes will remain approximately constant per period of time, or may be completely exhausted for hours or even days.
This smaller market is "more orderly" for Bitcoin ETF
So Bitwise promised us some good news. But in reality it is more like just good news for them. Because this research was actually presented to the SEC in support of Bitwise Bitcoin ETF application. So the good news is that although an alleged 95% of the volume is false:
The real market for bitcoin is considerably smaller, more orderly and more regulated than is generally understood.
Well whoopee-doo! The bad news is obviously that there are questionable exchanges that know how to tweak their bots to avoid detection.
Should this research from Bitwise get a positive effect on the Bitcoin ETF application? Share your thoughts below !
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