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Bitwise report makes claim: "Only 10 exchanges have actual volume"

www.chepicap.com 23 March 2019 06:00, UTC
Reading time: ~3 m

Bitwise recently submitted a report to the SEC concerning their research on the current state of affairs among crypto exchanges, in relation to their own filing for a Bitcoin ETF. According to the 226 slides that they submitted, 95% of all Bitcoin spot trading that is reported is faked, and only 10 exchanges have any real (>$1 million daily) trading volume.

Bitwise summarized their findings in a twitter dump, and here are some highlights:

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

2/ First, key takeaways:

A. 95% of reported BTC spot volume is fake
B. Likely motive is listing fees (can be $1-3M)
C. Real daily spot volume is ~$270M
D. 10 exchanges make up almost all real trading
E. Most of the 10 are regulated
F. Spreads are <0.10%. Arb is super efficient

— Bitwise (@BitwiseInvest) March 22, 2019

5/ Only 10 exchanges have >$1M real daily bitcoin trade volume. @binance, @bitfinex, @krakenfx, @Bitstamp, @coinbase, @bitFlyerUSA, @Gemini, @itBit, @BittrexExchange, @Poloniex / @circlepay

You can see the daily BTC trade volume on these exchanges at: https://t.co/MQ4CD3K9hz pic.twitter.com/yLFiL8kQNn

— Bitwise (@BitwiseInvest) March 22, 2019

The report goes onto explain how this isn't really all bad news. They claim that when you remove the "fake" volume, the actual spot volume percentage matches well with what we see in the gold markets, and is only a bit higher than what we see for the crypto futures market. The point Bitwise is trying to make to the SEC is that despite everything, the crypto market is still incredibly healthy.

17/ And, when you remove fake volume, CME and CBOE futures volume is significant ($91M), especially compared to the real spot volume (35% for Feb 2019).

This is good news because it means CME— a regulated, surveilled market— is of material size, which important for an ETF. pic.twitter.com/pVqMqPSZkt

— Bitwise (@BitwiseInvest) March 22, 2019

Some users on twitter found the claim hard to believe that no other exchanges had significant volume:

Erm.Hold your horses there @BitwiseInvest.Over the last 5 years Huobi has accumulated 6m users,built 4 regulated exchanges and currently employs 1.2k globally- your sweepingly unscientific statement that "only 10 exchanges have real volume" is verging on a gross misrepresentation

— Josh Goodbody@Huobi (@JoshGoodbody) March 22, 2019

It is unclear at this time if Bitwise will have a response to this claim.

Ultimately, this is just a few key points, as the full report gets into the methodology for this research and far more detailed results. The tone is very positive and optimistic about the nature of the current crypto markets. Will this help change the SEC's stance towards crypto and usher in the first Bitcoin ETF? Stick with Chepicap to find out.

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