The United States Securities and Exchange Commission has published a report by the American Asset Management, Bitwise. In it, the authors analyze cryptocurrency trading platforms and volumes. 

The 100-pages long whitepaper’s title is “Economic and Non-Economic Trading In Bitcoin: Exploring the Real Spot Market For The World’s First Digital Commodity.” It elaborates Bitwise’s presentation from March 2019. Back then the company pointed out that 95% volume on unregulated exchanges is distorted. This means that it is either fake or non-economic in nature.

In its new report, Bitwise points out that “prevalence of fake data sows distrust and obscures the true nature of the bitcoin markets.” Hence the researchers examined 83 trading platforms, including Kraken, Binance, Bitfinex, Coinbase etc. They built individual screen scrapers for each exchange. They also used a headless Chrome browser сalled Puppeteer48. The latter’s purpose is “to navigate to the BTC trading pages of each exchange and scrape the orderbook and trade history from the browser screen.”

Surprising findings

The researchers begin by stating that indeed 95% of reported trading volume in bitcoin is fake or non-economic in nature. However, this distortion, surprisingly, does not “influence price discovery in the real bitcoin spot market.”

They also state that the real BTC spot market is remarkably efficient. They mention that an effective arbitrage system maintains accurate prices on real global bitcoin spot exchanges. It also eliminates sufficient pricing discrepancies “in a matter of seconds.”

The whitepaper also praises such tools as regulated bitcoin futures, the entry of large algorithmic market makers and bitcoin custody improvements. According to it, these means have “dramatically improved the efficiency” of BTC markets.

CoinMarketCap under fire

Interestingly, CoinMarketCap has once again received major critique. The whitepaper states that the website’s volume numbers and other data aggregators in the industry are “surprising because they are wrong.” Bitwise argues that the data is “wildly inflated by a combination of fake volume and wash trading.” The latter “dramatically skews the public’s view of the bitcoin market in a negative way.”

The report comes after the SEC once again delayed its decision on the Bitwise ETF application. At the same time, Coinmarketcap has recently announced that it is launching two new cryptocurrency indices.


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