Cryptocurrency
We Still Don’t Know Bitcoin’s Real Volume
As reported by CoinDesk, “Fake volume became one of crypto assets’ leading narratives of 2019, as a U.S. regulatory application for an exchange-traded product (ETP) followed the work of earlier researchers in showing how as much as 95 percent of lit markets’ reported bitcoin trading volume might be fake. That’s resulted in conservative estimates of bitcoin volume that are […]
As reported by CoinDesk, “Fake volume became one of crypto assets’ leading narratives of 2019, as a U.S. regulatory application for an exchange-traded product (ETP) followed the work of earlier researchers in showing how as much as 95 percent of lit markets’ reported bitcoin trading volume might be fake. That’s resulted in conservative estimates of bitcoin volume that are probably far too low, and a condition of uncertainty as to how much bitcoin is actually being traded.
“You could think of fake volume as a natural feature of crypto’s novel market structure, in which:
- liquidity is divided among many competing exchange venues
- trading fees are high relative to other asset categories
- exchanges provide data for free
“In crypto markets, data is a marketing tool instead of a revenue source, and some exchanges have been shown to use it that way, exaggerating volumes in order to enhance their perceived liquidity…”