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Only 5 Percent of Bitcoin (BTC) Trading Volume Is Legitimate: Bitwise Study

  • Alex Morris
    📰 News

    Bitwise has concluded that the majority of exchanges are faking their trading volumes en masse. Coinbase Pro remains one of the few exchanges that report real numbers. The report dwarfs the total daily volume to $273 mln, which makes CME futures look ‘more significant’  
       
     


Only 5 Percent of Bitcoin (BTC) Trading Volume Is Legitimate: Bitwise Study
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About 95 percent of Bitcoin trading volume is faked by unregulated exchanges, CNBC reports. The shocking revelation is part of a recent Bitwise study that analyzes the volumes of top cryptocurrency trading platforms.

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$273 mln of real trading volume

Bitwise Asset Management, a crypto startup whose Bitcoin ETF proposal is currently awaiting approval from the Securities and Exchange Commission (SEC), has focused on the top 81 platforms on CoinMarketCap (CMC). The total daily trading volume surpasses $6 bln, but only $273 mln is actually legitimate with 71 out of 81 exchanges engaging in wash trading.

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The good, the bad and the ugly

Coinbase Pro, which boasts a trading volume of around $27 mln, was one of the few ‘good’ exchanges that reported real numbers (the bid-ask spread was just about $0.01). Hence, Coinbase is responsible for almost 10 percent of all real trading volume. The majority of other exchanges that were under study couldn’t relate – CoinBene, for instance, has a $15 spread while some of the worst cases have a mammoth-sized spread of $300.  


The new old story

The fact that the armada of hardly regulated exchanges is reporting artificial trading volumes shouldn’t come as a surprise to anyone from the industry. There have been numerous other studies that point out how these young exchanges shamelessly fake their numbers to improve their position on CMC and lure in new users. However, Bitwise’s Matthew Hougan claims that they were the first to determine which exchanges have legitimate numbers.

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A different look at Bitcoin futures

As reported by U.Today, CBOE recently pulled the plug on Bitcoin futures with many speculating about a dwindling interest in crypto trading. However, its Chicago-based rival CME has no intentions to delist futures contracts, and for a good reason – Hougan states that the Bitcoin futures market now looks ‘more significant’ if to take into account the real trading volumes on cryptocurrency exchanges.

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Bitcoin's April 2 Breakout Was Reportedly Orchestrated by One Trader


Bitcoin's April 2 Breakout Was Reportedly Orchestrated by One Trader
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It’s been over two weeks since Bitcoin’s astronomical surge on Apr. 2, but new theories about what might have caused this bullish uptick continue to pop up. According to crypto-oriented analytical firm CoinMetrics, that epic surge was causes by a single trader.

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Mammoth-size trades

CoinMetrics claims that ‘a single committed trader’ concocted a plan to push the BTC price, and he successfully managed to do that by picking the time of the day when the global liquidity is at its lowest level.


(Source: CoinMetrics.io)

(Source: CoinMetrics.io)  

The report also suggests that the trader started to execute his plan on HitBTC (500,000 USDT were traded for Bitcoin prior to the price movement). After that, large trades were observed on Coinbase and Bitfinex.      

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Focusing on the future

Meanwhile, as reported by U.Today, another theory states that the rapid price surge was triggered by the expiration of the CME futures contracts and heavy spot and over-the-counter buying. One expert went as far as claiming that a simple April joke about the Securities Exchange Commission (SEC) could do the trick.

While no one is quite sure about what could have triggered the short-living rally, there is even a bigger disconnect when it comes to Bitcoin price predictions. While some share their bullish predictions for 2019, another report states that it could take 22 years for Bitcoin in order to match its current ATH of $20,000.

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