Report: Almost 95 Pct Of Bitcoin Trading Is Fake

Bitcoin

After sharp drops in bitcoin prices, a new study posits that almost 95 percent of all reported bitcoin trading is made artificially via exchanges that are unregulated. Bitwise Asset Management analyzed 81 exchanges during a four-day period in March for its report, which suggests bitcoin’s true market may be much smaller than what was once believed, The Wall Street Journal reported.

Bitwise Asset Management, a company located in San Francisco, provided the research along with an application for an exchange-traded fund (ETF) for bitcoin to the U.S. Securities and Exchange Commission (SEC). The company’s fund, however, is said to be built on the 5 percent of trading that the firm believes to be legitimate. Bitwise’s Head of Global Research Matthew Hougan said, according to the paper, “I hope everyone sees there is a real market for bitcoin.”

The report claims that trading on regulated exchanges falls into specific patterns: The volume of trading, in one case, increases and decreases at times that come amid hours when people sleep and work. At the same time, many trades were in round numbers, while smaller trades were more common in comparison to larger trades. Volume stays similar throughout the trading day in the case of unregulated exchanges, and there weren’t many round-number or small trades.

This comes after news surfaced today that bitcoin now trades at $3,990, which is far from highs of close to $20,000 and a bit above the nadirs of roughly $3,400. Some digital currencies are trading at as much as 90 percent off highs, while the whole sector has met a bit of a deep freeze. Recently, Citigroup decided that it will scrap its plans to bring a digital currency to market after several years of attempts. It seems the idea of a use case where a customer could walk into Starbucks and buy a cup of coffee with bitcoin may be a ways off.