Bitcoin [BTC] and the larger cryptocurrency market trading came to a standstill in March, when Bitwise Asset Management released their report which detailed that 95 percent of the exchanges fake their volume. Two months later, Bitwise released yet another report expanding on this misrepresentation.
The report, meant for the US Securities and Exchange Commission [SEC], attested that the Real BTC spot market still looked dismal, with only $554 million of the total $11 billion of the volume being legitimate. Two months were, by the looks of it, not enough for the cryptocurrency community to clean up its act as the report highlighted that 95 percent of the volume was fake.
Furthermore, the report added that the BTC spot market is more focused on the United States. Due to the country’s stern registration laws, compared to tax havens like Seychelles, Malta, Hong Kong, more crypto-companies would pick the latter option. Despite the westwards ‘focus,’ the US accounts for under 3 percent of the reported BTC trading volume on exchanges domiciled in America.
The report added:
“Moreover, studies that look at publicly traceable data suggest that the U.S. has a relatively large real-world footprint in the bitcoin and blockchain space.”
Bitwise contended this “real-world footprint,” based on several studies which affirmed the US’s dominance in web-traffic to BTC exchanges, accounting for 33 percent of total traffic, compared to other countries as well as VC investment into companies geared towards cryptocurrency and blockchain technology, which stood at 79 percent of all investment.
The report starkly suggested that the ‘misalignment’ of the reported volume to the above contention of the dominant US “real world-foot-print” is due to the faking of the “reported volume statistics.”
Given the real-world presence of the United States in the cryptocurrency market, coupled with the strong regulation within the country that accounts for domestic exchanges maintaining their volume and not misrepresenting it, Bitwise stated that 31 percent of all reported volume, that is “real,” comes from the US, with other countries in the mix, although in smaller proportions.
The report read:
“In reality, 31% of all reported volume takes place on exchanges domiciled in the U.S. market, with the remainder distributed amongst exchanges domiciled in Malta, Hong Kong, the UK, and Japan”
Of the ten exchanges that Bitwise hailed as having “real volume,” back in March and in their recent report, six are from the United States. Among those six are Coinbase, Kraken, Gemini, itBit, Bittrex, and Poloneix.
Based on this allocation, Bitwise draws a correlation between “real volume,” and “real world statistic,” for which it accounts for GDP, wealth, web-traffic and blockchain-related venture investments.
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Bitcoin is simple and elegant and very hard to replicate, says Chief Strategy Officer of CoinShares
Graduate of Finance and Economics, interested in the intersection of the world of decentralized currency and global governance.