A recent research report by Bitwise Asset Management last week revealed that 95% of the reported trading volumes in Bitcoin by CoinMarketCap.com is fake and artificially created by unregulated exchanges. Surprisingly, this fake data came from CoinMarketCap.com, the most widely cited source for bitcoin volume and is also used by most of the major media outlets. CoinMarketCap hasn’t responded yet to the findings.
“Despite its widespread use, the CoinMarketCap.com data is wrong. It includes a large amount of fake and/or non-economic trading volume, thereby giving a fundamentally mistaken impression of the true size and nature of the bitcoin market”, the Bitwise report states. The report also claims that only 10 cryptocurrency exchanges have actual volume, including major names like Binance, Coinbase, Kraken, Gemini, and Bittrex.
1/ New Research from us @BitwiseInvest.
As part of 226 slides presented to the SEC on our ETF filing, we did a first-of-its-kind analysis of *order book data* from all 81 exchanges reporting >$1M in BTC volume on CMC.
TLDR: 95% of reported volume is fake but LOTS of good news! pic.twitter.com/TuXLlDCRyP
— Bitwise (@BitwiseInvest) March 22, 2019
Following are the key takeaways of the report:
- 95% of reported BTC spot volume is fake.
- Likely motive is listing fees (can be $1-3M)
- Real daily spot volume is ~$270M
- 10 exchanges make up almost all of the real trading volume
- Majority of the 10 are regulated
- Spreads are <0.10%. Arbitrage is super efficient
CoinMarketCap.com(CMC) originally reported a combined $6 billion in average daily trading volume. However, the 226-slide presentation by Bitwise to the U.S. Securities and Exchanges Commission (SEC) revealed that only $273 million of CMC’s reported BTC trading volume was legitimate. The report also has a detailed breakdown of all the exchanges that report more than $1 million in daily trading volumes on CoinMarketCap.
Matthew Hougan, the global head of Bitwise’s research division, said, “People looked at cryptocurrency and said this market is a mess; that’s because they were looking at data that was manipulated”.
Bitwise also posted on its official Twitter account, “Arbitrage between the 10 real exchanges has improved significantly. The avg price deviation of any one exchange from the aggregate price is now less than 0.10%! Well below the arbitrage band considering exchange-level fees (0.10-0.30%) & hedging costs.”
11/ Good news time!
Arbitrage between the 10 real exchanges has improved significantly. The avg price deviation of any one exchange from the aggregate price is now less than 0.10%! Well below the arbitrage band considering exchange-level fees (0.10-0.30%) & hedging costs. pic.twitter.com/wCGOkZ1k2F
— Bitwise (@BitwiseInvest) March 22, 2019
To know more about this in detail, head over to the complete Bitwise report.
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