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Neat and funny that they have an uncited figure (the one with the six exchanges with wacky trade size distributions) from research that we did while I was worki

Neat and funny that they have an uncited figure (the one with the six exchanges with wacky trade size distributions) from research that we did while I was working at Bitwise. We found 95% of bitcoin trading volume at the time was fake: https://www.wsj.com/articles/most-bitcoin-trading-faked-by-unregulated-exchanges-study-finds-11553259600 https://www.wsj.com/articles/most-bitcoin-trading-faked-by-u...

dmurray 3y ago
What's so suspicious about the distribution on that graph from, say, ExRates? It's far from uniform, looks plenty ragged and random to me. Though I can't read the axes so I may be misinterpreting it.
- mlerner 3y ago
  The x-axis is size of trade, and the y-axis is % of trades at a specific size. ExRates had _many_ large trades, which shows up as a significantly different distribution than other exchanges like Coinbase/Bitstamp/Kraken (which had many small trades, and a long tail of larger size trades). See slide 42-44 here: https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca201901-5164833-183434.pdf https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca2...
setgree 3y ago
Thanks for posting this article, it's a real "the more the world turns" reminder for me. We're having the exact same conversation now about Bitcoin ETFs, based on the exact same concerns: https://www.reuters.com/technology/nasdaq-refiles-blackrocks-bitcoin-etf-application-with-sec-2023-07-03/ https://www.reuters.com/technology/nasdaq-refiles-blackrocks...
- mlerner 3y ago
  100% - although this time around there is (in my opinion) _a lot more data_ [1] that regulated markets (like CME bitcoin futures) drive price discovery. [1] There was data back then too, it just wasn't received.
hinkley 3y ago
Was this fake volume allowed by the new transaction system in Bitcoin? Because it seems like the old one would make that prohibitively expensive.
- mlerner 3y ago
  The volume we were looking at was on exchanges (not on chain).
pxmpxm 3y ago
I think the funnier part is this hits every single crypto cliché: 1) "exchange" doing shit that would put you directly in jail in any professional finance context 2) people with ~$0 money participating in the most speculative investment schemes 3) "exchange" having minimal handle on what they're doing, reverse scalping as part of 1) and not realizing this costs money (see Knight Capital) 4) "exchange" just ghosting with the 2) money when faced with negative pnl Future of finance, amirite?

dmurray 3y ago

What's so suspicious about the distribution on that graph from, say, ExRates? It's far from uniform, looks plenty ragged and random to me. Though I can't read the axes so I may be misinterpreting it.

mlerner 3y ago
The x-axis is size of trade, and the y-axis is % of trades at a specific size. ExRates had _many_ large trades, which shows up as a significantly different distribution than other exchanges like Coinbase/Bitstamp/Kraken (which had many small trades, and a long tail of larger size trades). See slide 42-44 here: https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca201901-5164833-183434.pdf https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca2...

setgree 3y ago

Thanks for posting this article, it's a real "the more the world turns" reminder for me. We're having the exact same conversation now about Bitcoin ETFs, based on the exact same concerns: https://www.reuters.com/technology/nasdaq-refiles-blackrocks-bitcoin-etf-application-with-sec-2023-07-03/ https://www.reuters.com/technology/nasdaq-refiles-blackrocks...

mlerner 3y ago
100% - although this time around there is (in my opinion) _a lot more data_ [1] that regulated markets (like CME bitcoin futures) drive price discovery. [1] There was data back then too, it just wasn't received.

hinkley 3y ago

Was this fake volume allowed by the new transaction system in Bitcoin? Because it seems like the old one would make that prohibitively expensive.

mlerner 3y ago
The volume we were looking at was on exchanges (not on chain).

pxmpxm 3y ago

I think the funnier part is this hits every single crypto cliché: 1) "exchange" doing shit that would put you directly in jail in any professional finance context 2) people with ~$0 money participating in the most speculative investment schemes 3) "exchange" having minimal handle on what they're doing, reverse scalping as part of 1) and not realizing this costs money (see Knight Capital) 4) "exchange" just ghosting with the 2) money when faced with negative pnl Future of finance, amirite?