Although the markets have been somewhat gloomy lately, there's been an unforeseen increase in trading activities within the cryptocurrency sector in the past few weeks. CoinMarketCap, among other platforms, has noted a spike, especially in trading pairs, sparking conversations about a potential market upturn. Bitcoin Bitwise Asset Management, a company dedicated to investment solutions in the cryptocurrency industry, recently caused quite a stir. They stated that a staggering 95% of Bitcoin trading appears to be fictitious.
Bitwise has unveiled that the majority of Bitcoin trades, if not more than 95%, are not genuine.
Could the findings from Bitwise bring unexpected benefits to the cryptocurrency community?
Throughout a number of presentations, Bitwise illustrated that the cryptocurrency landscape is more fragmented than it seems, with substantial differences in exchange rates. This could be attributed to the alleged fact that nearly 95% of reported volumes might not reflect real economic activity.
In a comprehensive presentation to the SEC regarding our ETF proposal, Bitwise performed an unprecedented examination of *order book data* from 81 exchanges that reported over $1 million in BTC transactions on CMC.
1/ New Research from us @BitwiseInvest .
Summary: Despite the daunting discovery that 95% of the reported trading volume is invalid, there are still encouraging developments to note.
To substantiate their claims, Bitwise highlighted 'suspicious exchanges' like the relatively unknown CoinBene, which asserts hosting massive amounts of BTC trades daily. It's suspected that 'trade printing' between bids and asks is conducted by bots. pic.twitter.com/TuXLlDCRyP
— Bitwise (@BitwiseInvest) March 22, 2019
Another example is a platform named RightBTC that experienced numerous occasions spanning 'multiple hours and days' with zero trading activity, despite allegedly having 'approximately four times the volume of other exchanges.' Lastly, CHAOEX was noted for displaying trading periods with unnaturally steady patterns. CoinBene Following the report's publication, many questioned CoinMarketCap for offering exchanges a platform without much scrutiny. Though initially silent for a few days, CoinMarketCap eventually commented on the issue.
Carylyne Chan, the global head of marketing at CoinMarketCap, confirmed the legitimacy of concerns regarding fictitious volumes. Coinbase Pro Chan announced that CoinMarketCap aims to introduce more analytical tools, including liquidity measures, exchange wallet figures, and traffic data, to enhance the accuracy of market assessments for its numerous daily visitors. She elaborated:
CoinMarketCap Responds
\"For example, if an exchange with minimal traffic reports $300 million in volume while holding only 5 BTC, users can form their own opinions without relying on us to designate it as 'good' or 'bad.'\" Bloomberg .
Although Bitwise's report may have unsettled some in the crypto investment circle, a few argue unsurprisingly that positive aspects can be found amidst the revelations. On CoinTelegraph's YouTube segment, Mati Greenspan emphasized how exposing false trading volumes indicates the unexpected efficiency of Bitcoin markets.
In a podcast chat with industry content creator Peter McCormack, Bitwise's head of research, Matt Hougan, shared similar views. He stressed that when you focus solely on genuine cryptocurrency market activities, it resembles the functioning of gold and other commodities more closely.
In fact, Hougan believes that recognizing authentic trading activities aligns Bitcoin's market more closely with other established commodities, which might prove beneficial for Bitwise's ETF application, now under SEC review.
For those who haven't caught up, last Friday, Bitwise released a report titled 'The Real Bitcoin Market.' Despite the seemingly benign title, the report was anything but. Analysts at the firm pointed out that, contrary to popular belief, Bitcoin markets are not always orderly or efficient, with often significant price discrepancies across different exchanges.
I've been chronicling cryptocurrency developments since 2013, with my analyses and interviews featured in major industry outlets such as LongHash, NewsBTC, and Decrypt. Besides writing, I'm part of HTC's EXODUS team, a Taiwanese tech company, and I own some Bitcoin. You can contact me at [email protected] eToro Crypto giants have shifted a colossal sum of over $500 million in Bitcoin (BTC) and Ethereum (ETH). Are they positioning themselves for the potential surge of Binofi (BINO) in the decentralized finance sphere?
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