About 95% of BTC Trading May be Fake, But These 10 Exchanges Keep it Real, Bitwise says

A study conducted by Bitwise concluded that about 95% of the total trading volume reported by exchanges is artificially created.

Bitwise’s team of researchers tested the performance of 81 exchanges during four days in March. Over that time, they were able to obtain specific patterns that proved inconsistent with the behavior of human traders.

The data got by a program designed specifically for this purpose proved that at least 71 of the 81 exchanges studied showed suspicious behavior. This implies that in reality of the 6 trillion dollars on average that was reported in trading volume, only 273$ were legitimate and verifiable.

Bitwise came to that conclusion after detecting several irregular patterns, the first of which is that in an Exchange, real trades happen in a disorganized manner. It is impossible to identify patterns; however, there are certain exchanges in which it is evident that the trades occurred in an organized way and with no clear benefit.

Another reason is precisely that in terms of investment and resources, it is inexplicable how exchanges that report less volume have more staff and a more significant number of visitors and followers than others of higher volume.

The Bitwise team sent the results of its investigation to the SEC as part of an application for a Bitcoin ETF approval. The organization concludes that despite the malpractice of numerous exchanges, those regulated and legitimate businesses provide various benefits that can boost the Bitcoin trading business legally and securely.

Also, Bitwise plans to fetch data from legitimate exchanges only

According to Bitwise, only ten exchanges pass the legitimacy test and provide reliable and unmanipulated information. Exchanges that reveal a real trading volume are

  1. Binance
  2. Bitfinex
  3. Kraken
  4. Bitstamp
  5. Coinbase
  6. bitFlyer
  7. Gemini
  8. itBit
  9. Bittrex
  10. Poloniex

How a Research Caused a Discussion

After Bitwise published the results of its report via Twitter, CZ, Binance’s CEO commented that more education is needed on the subject, explaining that few users know how to differentiate a “real” Exchange from one that manipulates its trading volume.

This tweet sparked a discussion with Mr. Larry Cermak, of The Block who criticized CZ’s silence regarding the unreliable information that coinmarketcap posts. Cz argued that he prefers to focus on the positive aspects of the ecosystem and the vital contribution that coinmarketcap has made to the ecosystem.

However, after this little discussion, Larry Cermak shared with his followers that CZ blocked him.

Most exchanges did not comment on or show an interest in the article. According to the Wall Street Journal, Meilun Li, Bibox’s director of operations said that “Every transaction on Bibox is accessible to anyone interested,” denying the accusations made by Bitwise.

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