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As per the report submitted by the Crypto asset management firm Bitwise to the SEC, nearly 95% of the Bitcoin trading volumes on unregulated Crypto exchanges are fake. Bitwise filed for Bitcoin ETF approval with the Securities and Exchange Commission (SEC) in January this year. The company has submitted a report to the SEC regarding manipulation of Bitcoin trading volume on various Crypto exchanges. The firm analyzed data from 81 Crypto exchanges over a span of four days in March. The study included regulated exchanges like Coinbase, Kraken, Poloniex, etc and also many unregulated exchanges including Coinbene, IDAX, BitForex, etc. In four days, over $6 Billion in Bitcoin volume was recorded on Coinmarketcap (March 4-7) out of which only $273 Million was deemed real according to Bitwise.
The study demonstrates the difference between real and fake volumes with examples, it compares volumes from Coinbase Pro and Coinbene, while Coinbase Pro reported a volume of $27 Million Coinbene reports a volume of $480 Million in the same time span. The study Analyzes data from the bid-ask spread, web traffic, social traction, etc to detect the potential fake volumes on these exchanges. Bitwise concluded that only 10 out of the 81 exchanges in the study showed real volume, they include Binance, Coinbase, Bitstamp, Poloniex, Kraken, Bitfinex, bitFlyer, Gemini, itBit and Bittrex. The firm’s research head Matthew Hougan told WSJ that if the firm’s ETF is approved, only the volume from exchanges in the study that represent the top 5% of trading would be considered legitimate. Matthew Hougan said in a statement with the Block:
“The fact that a significant portion of the reported daily volume in bitcoin is demonstrably fake will be unsurprising to many in the industry. Market participants have long understood, and experienced first-hand, that a substantial portion of reported volume is fake. This report is simply the first time that the data has been comprehensively assembled and analyzed to formally corroborate those anecdotal suspicions,”
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