Almost 95% Of Bitcoin Volume Is Fake According To Bitwise | UseTheBitcoin
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Almost 95% Of Bitcoin Volume Is Fake According to Bitwise

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Carlos is an international relations' analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.

Bitcoin (BTC) has experienced a large price surge in the last few months and crypto enthusiasts are getting excited about it. However, not every single platform offers the same trading volume and features to users in the market. Indeed, Bitwise Asset Management considers 95% of the trading volume on exchanges is fake.

Exchanges Register Fake Trading Volume

In a recent report released by Bitwise Asset Management, they show that almost 95% of the trading volume in exchanges is fake. In order to be able to gather this information, they have analyzed 83 exchanges in the space. They had a look at trade size histograms, volume spike alignment and also spread patterns of the exchanges.

There are 10 exchanges that have been classified as real volume platforms or reference exchanges. These platforms include Binance, Bitfinex, bitFlyer, Bitstamp, Bittrex, Coinbase Pro, Gemini, itBit, Kraken and Poloniex.

Three of the exchanges with fake volumes include OKEx, HitBTC and also Huobi. These platforms seem not to follow the same trading data of Bitwise’s real volume exchanges. They have mentioned that using the data provided by the company, these exchanges would have increased the volume trading from $554 million to $662 million. However, the researchers said that this would not have materially changed their conclusion.

Exchanges have already answered back. Indeed, HitBTC said that its users have a different customer profile compared to other exchanges in the market. Specifically, those exchanges that report legitimate trading show large differences with HitBTC and its users.

On the matter, they wrote:

“Different exchanges have different customer profile. HitBTC is among the first crypto exchanges to offer low-latency institutional grade (FIX) trading API. This is why the client profile of HitBTC differs from that of unmentioned by implied ‘reference exchanges.’”

Bitwise has also recognized that there are some algorithms operating in the market that capitalize on pricing discrepancies to keep prices closely together.

Another exchange, OKEx, informed that some traders perform wash trading activities in order to build their trading volume and have a lower fee structure. There are some exchanges that offer lower fees for users that trade certain amounts of Bitcoin and digital assets during a period of time.

The market has to improve and offer better services for users. It is not easy for companies to offer quality services, but it is just a matter of time before governments start regulating the space.

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