Are more than half of all bitcoin trades really fake? In the emerging and turbulent cryptocurrency market, where there are at least 10,000 tokens, Bitcoin is the great granddaddy, the blue-chip, accounting for 40% of the remaining $1 trillion in crypto assets. Bitcoin is a portal for cryptocurrencies.
An estimated 46 million adult Americans already own them, according to the New York-based Digital Investment Group, and more and more institutional investors and corporations are turning to emerging alternative assets.
But can you trust your cryptocurrency exchange or electronic broker's reports on trading in the primary digital currency?
Bitcoin is between a lie and the truth
One of the most common criticisms of Bitcoin is the widespread money laundering (a form of fake volume) and poor monitoring by exchanges.
The U.S. The Commodity Futures Trading Commission defines it as a laundering trade. Contribute to or falsify trades to make it appear that purchases and sales have really been made without exposing himself to market risks or changing the trader's position in the market.
The reason some traders engage in wash trading is to inflate the trading volume of an asset to create the appearance of more fame.
There is no universally accepted method for calculating daily bitcoin volume, not even among the most reputable research firms in the industry.
In addition to the challenges, there are ongoing concerns about the solvency of cryptocurrency exchanges, as confirmed by the general collapse of Voyager and Celsius.
In an exclusive interview with Forbes in late June, FTX CEO Sam Bankman-Fried commented that there are still many exchange failures to come.
A majosignificantsequence of the distrust of core markets is the Securities and Exchange Commission's refusal to approve an immediate bitcoin ETF.
Unfortunately for those hoping for a bitcoin ETF, many of these fears and criticisms are true. As part of lengthy research on the cryptocurrency ecosystem using 2021 data, the top 60 exchanges were ranked in March.
Recently, we conducted a deeper investigation of bitcoin trading markets to answer some pressing questions:
Where is Bitcoin being traded?
- How much Bitcoin is traded every day
- How is bitcoin traded?
- Our study examined 157 cryptocurrency exchanges around the world. Here are our key findings:
- More than half of the reported trading volume is likely fake or uneconomic. Forbes estimates the volume of global Daily Industry Bitcoins was $128 billion as of June 14. And that's 51% less than the $262 billion a person could get by taking the sum of self-reported volume from multiple sources.
- Tether, the world's largest stablecoin, is still a dominant player in the cryptocurrency economy, especially when it comes to trading against bitcoin. Its current market value is $68 billion, although its reserves are in question.
- As for the volume of Bitcoin activity in these companies, 21 crypto exchanges generate a billion dollars or more in daily trading activity, while the following 33 exchanges have volubooksging from $200 million to $999 million across all types of contracts, spot, futures, and perpetual.
- Perpetual futures contracts, or perpetual swaps as they are also known, are forward contracts in which investors do not have to renew their positions. Binance leads the way with a 27% market share, followed by FTX. Looking only at instant 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 in terms of fake volume are companies that advertise high volume but operate with little or no regulatory oversight, making their numbers more credible, particularly Binance, MEXC Global, and By bit. Overall, the least regulated exchanges in our study account for about $89 billion in real volume (they claim $217 billion).
The creation of new trading assets and products such as stablecoins and perpetual futures makes it more difficult for national authorities to regulate cryptocurrency markets. Major U.S. exchanges rarely use these instruments or contracts for their trading. However, foreign exchanges extensively use them to artificially create US dollar liquidity on their platforms (they cannot have US bank accounts).
In the Western world, and cially in the United States, the temptation is to trade Bitcoin only against U.S. dollars or euros and pounds sterling. But some of the largest pairs trading activity is against fiat currencies like the Japanese yen and Korean won, and against large stablecoins like Binance in US dollars and the US dollar currency.
BTC - daily trading volume in the United States
BTC - the daily volume of the US dollar currency
- The U.S. dollar currency (USDC) is gaining acceptance in the stablecoin arena. The daily liquidity of bitcoin - USDC amounted to $2.15 billion, with groups 1 and 2 splitting this sum by 39% and 60%, respectively.
- An interesting observation is that Group 2 exchanges actively use USDC in the bitcoin spot market, while Group 1 exchanges do so all the time. This difference in usage may indicate that Group 2 exchanges are open to the idea of alternative support for Tether's dominance in the stablecoin market.
- Both USDT and Binance USD (BUSD) generate more volume than USDC, but the latter now has 26 crypto exchanges (17 in Group 2) with daily trading volumes of $5 million or more, compared to 77 exchanges for USDT and five with BUSDAs the importance of the tether coin begins to wane, USDC may be the stablecoin most likely to reclaim its crown.
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