in the burgeoning and turbulent cryptocurrency market, with no fewer than 10,000 tokens, bitcoin is the blue-chip granddaddy, accounting for 40% of the $1 trillion in outstanding crypto assets. BitcoinBTC 0.0% is a cryptocurrency gateway drug.
An estimated 46 million American adults already own it, according to the New York Digital Investment Group, and a growing number of institutional investors and corporations are warming to the nascent alternative asset.
But can you trust what your crypto exchange or e-brokers tell you about trading the most important digital currency?
One of the most common criticisms of Bitcoin is the pervasive laundering of trades (a form of fake volume) and poor oversight across exchanges. The US Commodity Futures Trading Commission defines wash trading as "entering into or intentionally entering into transactions to make it appear that purchases and sales have been made without incurring market risk or changing the trader's market position.
" The reason some traders engage in wash trading is to inflate the trading volume of an asset to make it appear that its popularity is growing. In some cases, trading bots make these token wash trades, increasing volume, while insiders simultaneously reinforce the activity with bull notes, increasing the price, which is effectively a pump and dump scheme. Wash trading also benefits exchanges by making them appear to have more volume than they actually have, potentially encouraging more legitimate trading.
There is no universally accepted method for calculating daily bitcoin volume, even among the industry's most respected research firms. For example, at the time of writing, CoinMarketCap estimates the most recent 24-hour Bitcoin trading at $32 billion, CoinGecko at $27 billion, Nomics at $57 billion, and Messari at $5 billion.
Adding to the challenges are lingering concerns about the solvency of crypto exchanges, underscored by the public collapses of Voyager and Celsius. In an exclusive interview in late June, FTX CEO Sam Bankman-Fried noted that there are many stock market bankruptcies yet to come.
A significant consequence of this lack of confidence in its underlying markets is the Security and Exchange Commission's refusal to approve a spot bitcoin ETF.
Unfortunately for Bitcoin ETF enthusiasts, many of these concerns and criticisms are valid. As part of research on the crypto ecosystem using data from 2021, we ranked the top 60 exchanges in March. I recently took a deeper dive into Bitcoin trading to answer some pressing questions:
- Where are bitcoins traded?
- How many bitcoins are traded every day?
- How is Bitcoin traded?
More than half of all reported trade volume is likely to be false or uneconomic. estimates that the global daily bitcoin volume for the industry was $128 billion on June 14. That's 51% less than the $262 billion one would get if self-reported volumes were combined from multiple sources.
TetherUSDT 0.0% The world's largest stablecoin continues to be a dominant player in the cryptocurrency trading economy, especially when it comes to Bitcoin trades. Its current market capitalization is $68 billion, despite questions about its reserves.
In terms of how much bitcoin activity is going on at these firms, 21 crypto exchanges generate $1 billion or more in daily trading activity, while another 33 exchanges had a volume between $200 million and $999 million across all types of contracts, spots, futures, and perpetual. Perpetual futures, or eternal swaps, as they are also called, are futures contracts that do not require investors to reverse their positions. Binance is the clear leader with a 27% market share, followed by FTX. Looking only at the spot bitcoin, Binance, FTX, and OKX share the top position. Chicago-based CME Group is the market leader in Bitcoin futures trading.
The biggest problem areas when it comes to fake volumes are firms that offer a lot of volumes but operate with little or no regulatory oversight to increase the credibility of their numbers, especially Binance, MEXC Global, and By bit. The less-regulated exchanges in our study together account for approximately $89 billion of real volume (requires $217 billion).
The creation of new trading assets and products, such as stablecoins and perpetual futures, creates complications for national authorities trying to regulate crypto markets. Major US exchanges hardly use these instruments or contracts in any of their trades. However, offshore exchanges use them heavily as ways to synthetically create US dollar liquidity on their platforms (they can't get US bank accounts).
In the Western world, and especially in the US, it is tempting to think that Bitcoin is only traded for the US dollar or the Euro and the British pound. However, most trading pair activity occurs against fiat currencies such as the Japanese yen and Korean won, and against major stablecoins such as the US dollar and Binance's USD coin. 573 million people visit cryptocurrency websites every month.
I hope this report builds on the important work done by other digital asset researchers such as Bitwise, who estimated in a March 2019 white paper that 95% of CoinMarketCap's bitcoin trading volume was fake and/or uneconomic.
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Upvoted 👌 (Mana: 0/6) Get profit votes with @tipU :)
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Thank you @alokkumar
Would love to have comment regarding this publication from your side
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