Mar 22, · 95% of all Bitcoin trades are fake, Bitwise tells SEC In a filing to gain approval of an ETF, Bitwise Asset Management proposes tracking 10 ‘honest’ exchanges to alleviate market manipulation concerns By Leo Jakobson / March 22, /. Dec 16, · By discounting the “fake volume” of unregulated exchanges, if we only count the real trading volume of the 10 regulated exchanges that make up most of that volume, it would be easy to draw a rational conclusion that the Bitcoin trading scene in the U.S. is much more organized and follows the rules of economics. Mar 26, · Now, in a twist, a company hoping to list an ETF has reported to US financial regulators that around 95% of all Bitcoin trading volume has been faked by exchanges. Bitwise, a crypto-asset Author: Mike Orcutt.
95 bitcoin trading fake95% of all Bitcoin trades are fake, Bitwise tells SEC | Modern Consensus.
That scenario passed Bitwise's test for having real volume. Exchanges may have an incentive to report fake volume. Bad actors may look to attract listings for new initial coin offerings, or ICOs, who want their cryptocurrency on an exchange where more trading goes on, Bitwise said.
The office of New York Attorney General also flagged the issue in a recent report warning that exchanges are vulnerable. Because most cryptocurrency trading platforms don't use the same monitoring tools as stock exchanges, SEC Chairman Jay Clayton has warned that investors may not get a fair assessment of bitcoin's price.
Hougan said this also explains why trading volume for regulated bitcoin futures has seemed weak. In an attempt to gain regulatory approval for a Bitcoin exchange traded fund ETF , Bitwise Asset Management attacked the accuracy of data listed on cryptocurrency tracking site CoinMarketCap.
The claim came in a study filed with the U. Securities and Exchange Commission and made public on March The Bitwise study comes on the heels of a report released on March 8 by the Crypto Integrity project, which alleges that 88 percent of the trading reported in February was fraudulent.
Among the issues Bitwise cited were evidence of wash trades, in which identical buy and sell orders essentially cancel each other out.
Other indications are virtually all trades being executed between the bid and ask price; massive trade volume compared to legitimate exchanges; very wide spreads between the buy and sell prices; very few small-value trades of the type seen on what Bitwise considers more reputable exchanges; stretches of hours and even days with no trade volume at all; and trade volume that remains consistent across the day, rather than rising and falling in accordance with human activity rhythms.
Bitwise proposes basing its Bitcoin valuation on the price and volume reported by the 10 exchanges its research found were reporting honest trading volumes out of 81 studied from March 4 — 8.
That report also accused Kraken and Binance of operating illegally in New York. In response to the Bitwise filing, CoinMarketCap. Solid evidence for this comes from the small number of exchanges that can actually verify that their trading data is real, he said. Why would exchanges dishonestly inflate their volumes? One incentive may be to attract ICO initial coin offering projects that want to be listed on exchanges that are facilitating lots of trading.
To list such projects, some exchanges charge fees that can be as high as a few million dollars.