BitWise: BTC’s Daily Trading Volume is Only $272 Million

In a presentation to the SEC, BitWise argued that the Bitcoin market is smaller and more regulated than it seems.

BitWise Asset Management is one of the latest firms to attempt a Bitcoin ETF proposal to the US SEC. Most of the firms who have previously tried to get a Bitcoin ETF have been denied on the grounds that Bitcoin is subject to too much market manipulation. As such, most of these applications have taken steps to prove that market manipulation on the Bitcoin network isn’t a major issue.

Bitwise, however, seems to be taking a different approach. Rather than outright denying that market manipulation is a problem, Bitwise acknowledged it directly in a report that was presented to the SEC. However, the company seemed to say that the manipulation that happens in the Bitcoin space happens in the reporting of figures rather than in the figures themselves.

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Data on CoinMarketCap is Largely Fake

“The real market for bitcoin is significantly smaller, more orderly, and more regulated than commonly understood,” the report reads. “95% of Bitcoin trading volume is fake and/or non-economic in nature.”

Why is this misinformation about Bitcoin trading volume so widespread? According to the report, it’s all because of CoinMarketCap.com. Even the most prestigious and reputable news sources–including the New York Times and the Wall Street Journal–seem to take CMC’s trading volume data at face value.


However, the report alleged that “despite its widespread use, trading volume data on CoinMarketCap is inaccurate. It includes a large amount of fake and/or non-economic trading volume, thereby giving a fundamentally mistaken impression of the true size and nature of the bitcoin market.”

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Only 10 of 81 Exchanges Had “Real” Volume

“Reported volume adds to roughly $6 billion/day*,” the report said. However, the report alleged that the real average daily trading volume of the Bitcoin market is just $273 million.

According to the report, this is for two reasons: first, “under-the-hood the exchanges that report the highest volumes are unrecognizable,” meaning that OTC exchanges (which are the exchange medium of choice for most Bitcoin ‘whales’ do not report their trading volume.

Separate rumors that data on CMC might be fake began circulating last year, but they were never taken too seriously by the cryptocurrency community.


Secondly, reported volume figures are often distorted by exchanges seeking to raise their prestige: “the vast majority of this reported volume is fake and/or non-economic wash trading,” the report explained. Exchanges may be interested in reporting higher trading volumes in order to “attract listing fees (often millions of dollars) from ICOs and alt coins.”

BitWise explained that through its own extensive analysis of data collected on 81 cryptocurrency exchanges, only 10 had actual trading volume: Binance, BitFinex, Kraken, Bitstamp, Coinbase, bitFlyer, Gemini, itBit, Bittrex, and Poloniex.

It’s still unclear whether the data will cause the SEC to lean toward or away from allowing for the creation of a Bitcoin ETF.

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