Bitwise Asset Management: Bitcoin Market Today Little Relationship to the Past

Bitwise Asset Management: Bitcoin Market Today Little Relationship to the Past

TL;DR: According to a new 105 page report from Bitwise Asset Management to the US Securities and Exchange Commission (SEC), “public perception is wrong, anchored in a bygone era and built on a foundation of bad data and false assumptions,” with regard to bitcoin’s spot trading market. Among the revelations contained in their research is new data suggesting which specific exchanges are not faking trade data.   

Bitcoin Market Today Little Relationship to the Past

A main culprit in finding worthy data for cryptocurrency exchange volume is hinted at early. On page 8 of Economic and Non-Economic Trading In Bitcoin: Exploring the Real Spot Market For The World’s First Digital Commodity by Matthew Hougan, Hong Kim, and Micah Lerner, the authors chide CoinMarketCap’s displaying of data equally:

There appears (pages 78, 79) to be some correlation between spot prices and CME derivatives. To Bitwise, this equates to market maturation.

“The CoinMarketCap data gets even more surprising when you dig into any particular exchange. For instance, the largest reported exchange in April, Fcoin, with $1.7 billion in daily trading volume, has a limited public profile. It has been mentioned just four times on Bloomberg (all of which are in the context of fake volume), has just 4,781 followers on Twitter , and is the 56,539th largest website in the world, according to Amazon’s By comparison, the largest exchange that the original Bitwise Study showed had real volume–the 15th ranked exchange, Binance–reported just $218 million in daily trading volume (less than 1/7th of Fcoin), but has been mentioned on Bloomberg 6,830 times, has 342k people following its CEO on Twitter, and is ranked as the 971st largest website in the world by This doesn’t make sense.”

It’s just one of many nuggets riddled throughout the report, which is quickly becoming mandatory reading in crypto circles. The San Francisco-based cryptocurrency index fund has been around since the 2017 boom year. Its team includes former Facebook, Goldman Sachs, and JPMorgan employees, with backing from “PayPal, BlackRock, Square, Coinbase, Stripe, Western Asset, Royal Bank of Scotland, Chain, Twitter, Palantir, and McKinsey,” according to the firm’s website.

Of 83 Exchanges, 10 Found to Have Honest Trading Volumes

The report they refer to as a “white paper” is probably an attempt to sway regulators into eventually approving ETFs — a veritable gold standard in retail trading for institutional investors. The SEC has been reluctant due to issues of so-called market maturity, and so Bitwise was keen to place exchange growth and spot prices into perspective.

Bitwise Asset Management: Bitcoin Market Today Little Relationship to the Past

Trimming the fat, researchers noted the bitcoin spot market is indeed small, but it’s also more regulated and more efficient than previously understood. In its first report, Bitwise claimed something like 95% of all trading volume on so-called unregulated exchanges were irrational at best and phony at worst.

This time around exchanges, excluding those from South Korea, such as Binance, Bitfinex, Coinbase, Kraken, Bitstamp, bitFlyer, Gemini, itBit, Bittrex, and Poloniex were highlighted standouts for researchers as having not faked their combined roughly half a trillion dollars in daily volume. The other 73 were found to be problematic, either outright faking volume or wash-trading.

DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH. 

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