95% of the announced trading volume of Bitcoin turned out to be fake

Original author: Bitwise Invest
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Within the 226 slides presented by the Securities and Exchange Commission, we ( @BitwiseInvest ) conducted the first of its kind analysis of data from all of the 81 exchanges reporting BTC> $ 1M on CoinMarketCap

TLDR: 95% of the indicated volume is fake, but there is good news!

Caution, under the cut will be a bunch of images from the presentation

Key points


  • 95% of reported BTC volume is fake
  • Likely motive is listing fees (maybe $ 1-3M)
  • Real daily volume ~ $ 270M
  • 10 out of 81 exchanges provide real data
  • Most of them (out of 10) are regulated

And three links



The total daily transaction volume is about $ 270M - 95% less than reported.


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Only 10 exchanges have> $ 1M real daily BTC trading turnover:


@binance , @bitfinex , @krakenfx , @Bitstamp , @coinbase , @bitFlyerUSA , @Gemini , @itBit , @BittrexExchange and @Poloniex The
daily BTC trading volume for these exchanges can be found at the following link .

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How can you say what is real and what is fake?


There are two tests (described in more detail in the presentation):
First: real exchanges have more transactions with small amounts than with large ones (with surges on round numbers, such as 1.0 BTC due to behavioral preferences).

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Dishonest exchanges, on the other hand, have clearly artificial histograms of the trading volume.

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Second test: On real exchanges, surges in the trading volume are almost perfectly symmetrical to each other, because are part of the same market

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On fake exchanges, trading volume charts do not have such obvious similarities and do not correspond to a wider market. (More examples and detailed analysis on the site ).

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Excluding fake data, the real volume of BTC is quite healthy, given its market capitalization.


The market capitalization of gold is ~ $ 7T with a volume of ~ $ 37B, which means a daily turnover of 0.53%.

Bitcoin's market capitalization of $ 70B means a daily turnover of 0.39%, which is quite similar to the numbers with gold.

Good news time!


Arbitration between 10 real exchanges has improved significantly. The deviation of the average price of any exchange from the total price is now less than 0.10%! Significantly below the arbitrage range, given exchange fees (0.10-0.30%) and hedging costs

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Here is the price deviation broken down for each of the 10 exchanges with real volume. Deviations are very small, which is good


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Here is another chart showing the price spread among these 10 exchanges. There is one global, single price


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More good news - 9 out of 10 real-volume exchanges are regulated by FinCEN as a cash service company and 5 out of 10 by the New York State Department of Financial Services under BitLicense.

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Also, 5 out of 10 exchanges introduced surveillance tools to prevent market manipulation

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AND, not taking into account fake data, the volume of CME and CBOE futures is significant ($ 91M), especially compared to the real trading volume (35% of the monthly trading volume for February 2019) .

This is good news, because it means that CME is regulated, the observed market has a material size, which is important for foreign exchange-traded investment funds.

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To summarize: The bitcoin market is smaller than reported, but more efficient and regulated, reducing the risk of problems around market manipulation.

You can learn more about our report at the links given above.

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