A majority of bitcoin trading is a hoax with about 95 percent of spot trades being faked by unregulated exchanges, an analysis by San Fransisco-based Bitwise Asset Management showed.
The analysis, first reported by The Wallstreet Journal, showed concerns by regulators that cryptocurrency markets are still ripe for manipulation.
Bitwise met with the Securities and Exchange Commission to discuss its application for its proposed bitcoin exchange-traded fund and it submitted analysis that could help regulators cut through the noise.
Matthew Hougan, global head of research at Bitwise, said that people were looking at manipulated data and that is why they think that the cryptocurrency market appeared to be a mess.
“When you cut away the echo chamber of these nonsense numbers, it should be an efficient, well-arbitraged market,” Hougan added.
The study shows that only $273 million out of the aggregated $6 billion in average daily bitcoin volume was legitimate.
“The idea that there’s fake volume has been rumored for a long time; we were just the first people to systematically look at which exchanges were delivering real volume,” Hougan told CNBC.
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Bitwise compared volumes Coinbase Pro, which reported about $27 million in average daily volume in bitcoin.
The difference between the price a seller wants and the price the buyer wants for bitcoin was 1 percent, which passed Bitwise’s test for having real volume.
However, in another comparison, CoinBene had an almost $15 difference. According to Hougan, they found other examples with differences of more than $300.
