More evidence emerges that most bitcoin trading volume is not real

Chris Dannen

By Chris Dannen

Just two weeks after this post by an insider claiming anecdotal evidence of fake volume on the exchange Kraken, a new study cited in the Wall Street Journal claims as much as 95 percent of bitcoin volume is fabricated by cryptocurrency exchanges.

Most Bitcoin Trading Faked by Unregulated Exchanges, Study Finds
"Nearly 95% of all reported trading in bitcoin is artificially created by unregulated exchanges, a new study concludes, raising fresh doubts about the nascent market following a steep decline in prices over the past year. ... By contrast, the dozens of unregulated exchanges that have cropped up over the past year show different trading patterns. Buy and sell orders appear in pairs, with one neutralizing the other. Trades are almost always executed within bid and ask prices, indicating a lack of the more haphazard decision-making one would expect from human traders. There are very few small or round-number trades. Volume is consistent across the trading day."

Bitwise Asset Management Presentation to the U.S. Securities and Exchange Commission
"Reported volume adds to roughly $6 billion/day*, but under the hood the exchanges that report the highest volumes are unrecognizable. The vast majority of this reported volume is fake and/or non-economic wash trading."

Fake Volume, but Good News

Other News

Yield Curve Inverts For The First Time Since 2007: Recession Countdown Begins
"As we noted below, on six occasions over the past 50 years when the three-month yield exceeded that of the 10-year, economic recession invariably followed, commencing an average of 311 days after the initial signal. And here is Bloomberg showing how the yield curve inverted in 1989, in 2000 and in 2006, with recessions prompting starting in 1990, 2001 and 2008. This time won't be different."

The bond market is flashing its biggest recession sign since before the financial crisis
"The spread, or yield curve, between the 3-month and 10-year Treasury notes just broke the longest streak ever of being above 10 basis points, or 0.1 percentage point. The two maturities were last below that level in September 2007, a run of 3,009 trading days, according to Bespoke Investment Group. The two maturities inverted Friday morning, a near-perfect sign that a recession is coming. An inverted yield curve does not mean a recession is imminent but that one is likely over the next year or so."

Bitcoin’s True Market Dominance
"It is my opinion that Bitcoin will continue to preserve its Schelling Point, and maintain greater than 80% market dominance. CoinMarketCap’s 'Market Dominance' is flawed since it does not factor in liquidity and the reported 55% is significantly understated."

WSJ’s ShapeShift Exposé Overstated Money Laundering by $6 Million, Analysis Says
"Add to that ether to roughly 40 bitcoin, which ShapeShift itself found to be associated with suspicious wallet’s the WSJ identified, and the total estimate falls just shy of $3 million. When asked about the investigative process, a WSJ spokesperson told CoinDesk: 'An analysis looking at individual tainted ethereum coins, rather than tainted wallets, would be a different project than what the Journal embarked on, and one we can’t comment on because we have not reviewed it.'"

Clarification on the Acceptance of ProgPoW Into a Future Hard Fork
"In Core Devs Meeting #52 (January 4, 2019) it was decided we would go ahead with ProgPoW. It was decided by me asking the group if anyone had any opposition to moving forward with ProgPoW and no one speaking up. It's sort of like accepting a proposal by silence."

Facebook employees had access to millions of user passwords
"'As part of a routine security review in January, we found that some user passwords were being stored in a readable format within our internal data storage systems,' Facebook said in a statement. 'This caught our attention because our login systems are designed to mask passwords using techniques that make them unreadable. We have fixed these issues and as a precaution we will be notifying everyone whose passwords we have found were stored in this way.' Facebook’s blog post did not say how many users were affected."

Connecting Ethereum, EOS, and Tron: Making Blockchain Interoperability a Reality
"PlasmaChain provides a platform for developers to build their app once, and know they’ll continue to be able to reach the largest pool of users possible in the future — piggybacking on the success of all other chains, and bringing those benefits back to developers and users of PlasmaChain DApps. In a sense, PlasmaChain becomes the Universal Layer 2."