Bitwise: Nearly 95% of reported bitcoin trading volume are artificially created by unregulated exchanges

A majority of bitcoin trading volume is artificially created by unregulated exchanges, according to a Bitwise Asset Management report cited by The Wall Street Journal.

Bitwise, a crypto asset management firm, recently submitted an application with the SEC to launch a bitcoin-based ETF. As part of the application, the firm attached a report in which it collected and analyzed Bitcoin trading data, over four days in March, across 81 cryptocurrency exchanges. For the report, the firm looked for patterns that show real and artificial trading, concluding that 95% of the reported trading volume of these exchanges were questionable, including "patterns that indicated the trading on them appears manufactured." 

"The fact that a significant portion of the reported daily volume in bitcoin is demonstrably fake will be unsurprising to many in the industry. Market participants have long understood, and experienced first-hand, that a substantial portion of reported volume is fake. This report is simply the first time that the data has been comprehensively assembled and analyzed to formally corroborate those anecdotal suspicions," according to Matthew Hougan, Bitwise’s head of global research.

Of the $6B reported daily volume, Bitwise concluded that only $273M was legitimate. The firm cites CoinBene, OEX,, BitForex, and Bibox as the top five unregulated exchanges by trading volume. Hougan tells The Wall Street Journal that if the firm's ETF is approved, it would be based on the 5% of trading it considers legitimate. 

“I hope everyone sees there is a real market for bitcoin,” he said. The firm also released a tool for users to track what it believes is the accurate bitcoin trading volume.

This piece has been updated with a statement from Bitwise.