95% Of BTC Volume Is Fake And Binance Enters Australia
March 26, 2019 Weekly Crypto Round Up
Pump Up The Volume
A new study from Bitwise Asset Management reports nearly 95% of all reported bitcoin trading is faked by unregulated exchanges. The San Francisco-based company reviewed transaction activity across 81 exchanges over a four day period in March. Upon completion, they submitted their findings to the US Securities and Exchange Commission along with an application to launch a bitcoin ETF. During the period studied, just $273 million of the reported $6 billion in daily volume was found to be legitimate while the rest was either considered wash trading or entirely made up.
While the findings are alarming, the news should come as no surprise to traders. CoinMarketCap reports transaction statistics for 400 bitcoin exchanges and trading pairs of which only a handful like Binance, Bitfinex, Kraken, Coinbase, Gemini, Bittrex, and Poloniex are legitimate. For example, Coinbase averaged a daily volume of $27 million during the four days studied in March. CoinBene, an exchange that’s been operating for only about 18 months, reported $480 million in daily volume for the same period. According to Amazon’s Alexa ranking system, Coinbase ranks 1,500th for global website traffic while CoinBene takes a spot around 53,600th place. It’s not difficult to see why many traders were already suspicious.
Aside from the lack of correlation between web traffic and trading volume, Bitwise found suspicious trading patterns among the unregulated exchanges. Legitimate exchanges have predictable peaks and valleys related to volume throughout the day while the unregulated exchanges experienced no drop off in volume during sleeping hours. Furthermore, data from legitimate exchanges are influenced by human bias and there is clustering of trade activity around prices with round numbers. The unregulated exchanges did not report similar trends.
Why would an exchange fake volume? By inflating the daily volume reported to websites like CoinMarketCap, exchanges can charge a higher listing fee for tokens. Of course this means legitimate trading volume is less than previous estimates. Unfortunately, this also means the bitcoin futures market is of substantial enough size to potentially manipulate bitcoin prices.
Binance At Work — Land Down Under
Thanks to cryptocurrency exchange behemoth Binance, Australians can now purchase bitcoin at more than 1,300 newsstands across the country. The new service will be called Binance Lite and demonstrates the exchange’s commitment to improving and expanding fiat-to-cryptocurrency on-ramps around the world.
In order to use the service, Australian citizens will first have to register in order to comply with Know Your Customer and Anti-Money Laundering laws. While some see the program as a positive step towards further adoption, others view it as an unnecessary inconvenience when compared to online purchases. Rumors continue to swirl and many point to Singapore as Binance’s next focus on expansion.
The Other News We’re Following
- Jack Dorsey, Twitter co-founder/CEO and Square founder/CEO, announced Square would be hiring crypto engineers and designers to work on open source projects to benefit the crypto ecosystem
- Santander Bank has confirmed they are using Ripple’s xCurrent product for settling international transactions between the US and 18 members of the European Union
10percent of global GDP to be stored on blockchains by 2027 according to a report by Cisco Systems
“One day, somebody’s going to figure out — whether that’s Argentina, ten years from now, five years from now — how to use cryptocurrencies to stay alive when their facing a financial crisis, and then you’re going to find out that this moment has arrived.”
— Rahm Emanuel, Chicago mayor and former Chief of Staff for President Obama
