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Here's the slide deck presented by Bitwise, who did the study: https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca201901-5164833-183434.pdf https://www.

Here's the slide deck presented by Bitwise, who did the study: https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca201901-5164833-183434.pdf https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca2... Another summary article (non-paywalled) from CNBC: https://www.cnbc.com/2019/03/22/majority-of-bitcoin-trading-is-a-hoax-new-study-finds.html https://www.cnbc.com/2019/03/22/majority-of-bitcoin-trading-... EDIT: This is a very slick presentation. The weakest point I saw was a bit of handwaving around the key signing ceremony, specifically about how sharded keys are distributed. It's odd that they go into such detail about how to provision a clean laptop but then just sort of say "well, take your private key and mask it into seven pieces".

andrewla 8y ago
Page 61 has the 10 exchanges that appear to have real volume of the 81 exchanges analyzed: Binance, Bitfinex, Kraken, Bitstamp, Coinbase, bitFlyer, Gemini, itBit, Bittrex, and Poloniex. They estimate that the total ADV for the market is $273M, less than the $6B reported by https://coinmarketcap.com https://coinmarketcap.com.
- gruez 8y ago
  >Page 61 has the 10 exchanges that appear to have real volume of the 81 exchanges analyzed: Binance, Bitfinex, Kraken, Bitstamp, Coinbase, bitFlyer, Gemini, itBit, Bittrex, and Poloniex. I didn't expect Bitfinex to be on that list, considering all the USDT shenanigans that they were caught up in.
  - andrewla 8y ago
    I was a little surprised by that as well, but my own analyses of Bitfinex data (together with the USDT/USD market on Kraken) brought me to a similar conclusion that they are likely operating above board. That said, there have been previous studies challenging that conclusion so I wouldn't be surprised if they found more signals on a deeper inspection. The slide deck does go into the USDT/USD differences as well, and even mentions the large Bitfinex hack.
- qes 8y ago
  Probably no surprise to most people at least moderately familiar with the Bitcoin trading world. I would've named 8 of those off the top of my head as exchanges with legitimate volume, and I'm not a day trader or all that involved, just a bit of a holder and followed along the 2017 craze.
Animats 8y ago
The slide deck is worth reading. There are only 10 real Bitcoin exchanges doing real transactions. The others are all clearly faking it, just from observing the overall trading patterns. Something the slide deck doesn't address is how much all that fake activity affects the real price. The slide deck demonstrates that the real exchanges track each other closely. But what's the fake activity doing to the price? It's much bigger than the real activity; it must have some effect. This new ETF looks better than the rejected Winkelvoss ETF. This output proposes third-party custody and insurance from major insurance companies. The Winkelvoss ETF tried to unload all the risk of theft on their customers.
apo 8y ago
Fascinating slide deck. They work out a scoring system to identify exchanges with fake volume. This has a number of consequences. For example, the exchange-traded volume starts to look more realistic given Bitcoin's aggregate value. Similarly, futures volume starts to look more comparable to exchange traded volume. The main benefit, however, is to surmount the SEC's objection to previous ETF applications: bitcoin market manipulation. If they succeed, Bitwise stands to become the first Bitcoin ETF in the US.
makomk 8y ago
I think the one-cent spread on Coinbase Pro mentioned in that article is partly just an artifact of their fee structure. Maker orders which are placed and sit on the order book have no fee, whereas orders which match against the order book are charged a fee. So unless people are desperate to trade, they often save on fees by place a post-only order at 1 cent away from the other side of the orderbook. You can often see this as a pair of walls 1 cent apart on either side of the orderbook.

andrewla 8y ago

Page 61 has the 10 exchanges that appear to have real volume of the 81 exchanges analyzed: Binance, Bitfinex, Kraken, Bitstamp, Coinbase, bitFlyer, Gemini, itBit, Bittrex, and Poloniex. They estimate that the total ADV for the market is $273M, less than the $6B reported by https://coinmarketcap.com https://coinmarketcap.com.

gruez 8y ago
>Page 61 has the 10 exchanges that appear to have real volume of the 81 exchanges analyzed: Binance, Bitfinex, Kraken, Bitstamp, Coinbase, bitFlyer, Gemini, itBit, Bittrex, and Poloniex. I didn't expect Bitfinex to be on that list, considering all the USDT shenanigans that they were caught up in.
- andrewla 8y ago
  I was a little surprised by that as well, but my own analyses of Bitfinex data (together with the USDT/USD market on Kraken) brought me to a similar conclusion that they are likely operating above board. That said, there have been previous studies challenging that conclusion so I wouldn't be surprised if they found more signals on a deeper inspection. The slide deck does go into the USDT/USD differences as well, and even mentions the large Bitfinex hack.
qes 8y ago
Probably no surprise to most people at least moderately familiar with the Bitcoin trading world. I would've named 8 of those off the top of my head as exchanges with legitimate volume, and I'm not a day trader or all that involved, just a bit of a holder and followed along the 2017 craze.

Animats 8y ago

The slide deck is worth reading. There are only 10 real Bitcoin exchanges doing real transactions. The others are all clearly faking it, just from observing the overall trading patterns. Something the slide deck doesn't address is how much all that fake activity affects the real price. The slide deck demonstrates that the real exchanges track each other closely. But what's the fake activity doing to the price? It's much bigger than the real activity; it must have some effect. This new ETF looks better than the rejected Winkelvoss ETF. This output proposes third-party custody and insurance from major insurance companies. The Winkelvoss ETF tried to unload all the risk of theft on their customers.

apo 8y ago

Fascinating slide deck. They work out a scoring system to identify exchanges with fake volume. This has a number of consequences. For example, the exchange-traded volume starts to look more realistic given Bitcoin's aggregate value. Similarly, futures volume starts to look more comparable to exchange traded volume. The main benefit, however, is to surmount the SEC's objection to previous ETF applications: bitcoin market manipulation. If they succeed, Bitwise stands to become the first Bitcoin ETF in the US.

makomk 8y ago

I think the one-cent spread on Coinbase Pro mentioned in that article is partly just an artifact of their fee structure. Maker orders which are placed and sit on the order book have no fee, whereas orders which match against the order book are charged a fee. So unless people are desperate to trade, they often save on fees by place a post-only order at 1 cent away from the other side of the orderbook. You can often see this as a pair of walls 1 cent apart on either side of the orderbook.