Most Bitcoin Trading Faked by Unregulated Exchanges, Study Finds (wsj.com)

Up to 95% of all reported trading in bitcoin is artificially created by unregulated exchanges, according to a new study [PDF], raising fresh doubts about the nascent market following a steep decline in prices over the past year. From a report: Fraudulent trading volume has dogged cryptocurrency trading for years, but the extent of the market manipulation has been difficult to determine. Bitwise Asset Management said its analysis of trading activity at 81 exchanges over four days in March indicates that the actual market for bitcoin is far smaller than previously thought. The San Francisco-based company submitted its research to the U.S. Securities and Exchange Commission with an application to launch a bitcoin-based exchange-traded fund.

The study, made public Thursday, is an attempt to alleviate the agency's longstanding concerns that a bitcoin ETF would leave investors exposed to fraud and market manipulation. Bitwise's fund, if approved, would be based upon the 5% of trading it considers legitimate, said Matthew Hougan, Bitwise's head of global research. That volume comes from 10 regulated exchanges that can verify that their trading data and customers are real. This slice of the market, he said, is well regulated, transparent and efficient. "I hope everyone sees there is a real market for bitcoin," he said.

Comments

Re: What other kind of trading could there be?

[mark-t]

That's ironic, because contrary to the name associated with it, the square root of -1 actually exists.

Descartes believed them to be imaginary (yes, he can be credited with giving them that name) because at the time expanding the idea of a number line to being just one axis of a number plane had not yet been thought of (the notion of a complex plane would come over a century later, and by that time, the term "imaginary" was very well entrenched).