New research finds that most bitcoin transactions are hoax
Smartphones display bitcoin sterling market value on the stock exchange through Yahoo Finance.
Guillaume Payen | LightRocket | Getty Images
Smartphones display bitcoin sterling market value on the stock exchange through Yahoo Finance.
The new study raises more questions about the legitimacy of bitcoin transactions.
An analysis released this week by Bitwise shows that 95% of Bitcoin spot transactions are forged by unregulated exchanges. The survey, first reported by the Wall Street Journal, reflects regulators' concerns that the cryptocurrency market is still suitable for manipulation.
Bitwise, an asset management company, is trying to list the first bitcoin exchange-traded fund, and the company met with the US Securities and Exchange Commission on Tuesday to discuss its application. As part of this process, the analysis it submits can help regulators eliminate noise.
"People are concerned about cryptocurrencies and say this market is a mess because they are looking at manipulated data," said Matthew Hougan, director of global research at Bitwise. "When you cut off these echoless rooms of meaningless numbers, it should be an effective, arbitrage market."
The analysis shows that of the 81 exchanges, the “substantially all trading volume” reported by 71 exchanges is a cleaning transaction, a term that describes a person selling and buying the same stock at the same time, or in this case bitcoin, To create the look of the event. market. In other words, this is not true.
The average daily bitcoin reported by these exchanges is $6 billion. The study found that only $273 million was legal.
Hougan told CNBC, “The idea of a false volume has been around for a long time, and we are only the first to systematically look at which exchanges provide the actual volume of transactions.”
The San Francisco-based company compared it on Coinbase Pro, which reported an average daily sales of about $27 million. Its median "spread", or the difference between the price the seller wants and the price the buyer wants, is about 1 cent. That scene passed the actual volume test of Bitwise.
But in another stark comparison, CoinBene--CoinMarketCap.com reported the most exchanges - the spread is close to $15. Hougan said they found other extreme trading examples with a spread of more than $300.
"What's amazing is that almost 18 times the volume of Coinbase Pro's volume will be expanded by a factor of 1,500," Bitwise said in the report.
The exchange may have the incentive to report false trading volumes. Bitwise said that a bad actor might want to attract new initial coin products or ICOs to market, and they want to use cryptocurrencies on more transactions. According to Autonomous Next, these fees can range from $1 million to $3 million per list.
US regulators are cautious about creating bitcoin mainstream for traders. The US Securities and Exchange Commission emphasizes the use of risk as a reason to reject other cryptocurrency ETF applications. The New York State Attorney's Office also pointed this out in a recent report that warned that exchanges are fragile. Since most cryptocurrency trading platforms do not use the same monitoring tools as stock exchanges, SEC Chairman Jack Clayton warned that investors may not be able to make a fair assessment of the price of Bitcoin.
Clayton said at a consensus investment conference in Manhattan in November, "Investors expect that trading the ETF-based merchandise is justified and unaffected by the risk of manipulation." "Before I feel comfortable, this is A problem that needs to be solved."
Hougan said this also explains why the trading volume of regulated bitcoin futures seems to be weak. The Chicago-based Chicago Mercantile Exchange and Cboe began listing Bitcoin derivatives at the end of 2017, but the number is much lower than the $6 billion reported by unregulated exchanges.
“When you realize the scale of the real bitcoin market, CME is starting to become more important,” Hougan said.
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- According to a study by Bitwise this week, 95 percent of the spot bitcoin trading volume was forged by unregulated exchanges.
- The company analyzed the first 81 encryption exchanges on the industry website CoinMarketCap.com. They reported a daily average of $6 billion in bitcoin. The study found that only $273 million was legal.
- "People are concerned about cryptocurrencies and say the market is a mess because they are looking at the manipulated data," said Matthew Hougan, director of global research at Bitwise.
Smartphones display bitcoin sterling market value on the stock exchange through Yahoo Finance.
Guillaume Payen | LightRocket | Getty Images
Smartphones display bitcoin sterling market value on the stock exchange through Yahoo Finance.
The new study raises more questions about the legitimacy of bitcoin transactions.
An analysis released this week by Bitwise shows that 95% of Bitcoin spot transactions are forged by unregulated exchanges. The survey, first reported by the Wall Street Journal, reflects regulators' concerns that the cryptocurrency market is still suitable for manipulation.
Bitwise, an asset management company, is trying to list the first bitcoin exchange-traded fund, and the company met with the US Securities and Exchange Commission on Tuesday to discuss its application. As part of this process, the analysis it submits can help regulators eliminate noise.
"People are concerned about cryptocurrencies and say this market is a mess because they are looking at manipulated data," said Matthew Hougan, director of global research at Bitwise. "When you cut off these echoless rooms of meaningless numbers, it should be an effective, arbitrage market."
The analysis shows that of the 81 exchanges, the “substantially all trading volume” reported by 71 exchanges is a cleaning transaction, a term that describes a person selling and buying the same stock at the same time, or in this case bitcoin, To create the look of the event. market. In other words, this is not true.
The average daily bitcoin reported by these exchanges is $6 billion. The study found that only $273 million was legal.
Hougan told CNBC, “The idea of a false volume has been around for a long time, and we are only the first to systematically look at which exchanges provide the actual volume of transactions.”
The San Francisco-based company compared it on Coinbase Pro, which reported an average daily sales of about $27 million. Its median "spread", or the difference between the price the seller wants and the price the buyer wants, is about 1 cent. That scene passed the actual volume test of Bitwise.
But in another stark comparison, CoinBene--CoinMarketCap.com reported the most exchanges - the spread is close to $15. Hougan said they found other extreme trading examples with a spread of more than $300.
"What's amazing is that almost 18 times the volume of Coinbase Pro's volume will be expanded by a factor of 1,500," Bitwise said in the report.
The exchange may have the incentive to report false trading volumes. Bitwise said that a bad actor might want to attract new initial coin products or ICOs to market, and they want to use cryptocurrencies on more transactions. According to Autonomous Next, these fees can range from $1 million to $3 million per list.
US regulators are cautious about creating bitcoin mainstream for traders. The US Securities and Exchange Commission emphasizes the use of risk as a reason to reject other cryptocurrency ETF applications. The New York State Attorney's Office also pointed this out in a recent report that warned that exchanges are fragile. Since most cryptocurrency trading platforms do not use the same monitoring tools as stock exchanges, SEC Chairman Jack Clayton warned that investors may not be able to make a fair assessment of the price of Bitcoin.
Clayton said at a consensus investment conference in Manhattan in November, "Investors expect that trading the ETF-based merchandise is justified and unaffected by the risk of manipulation." "Before I feel comfortable, this is A problem that needs to be solved."
Hougan said this also explains why the trading volume of regulated bitcoin futures seems to be weak. The Chicago-based Chicago Mercantile Exchange and Cboe began listing Bitcoin derivatives at the end of 2017, but the number is much lower than the $6 billion reported by unregulated exchanges.
“When you realize the scale of the real bitcoin market, CME is starting to become more important,” Hougan said.
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