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Crypto Exchanges Are Cleaning Up Wash Trading

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Crypto Exchanges Are Cleaning Up Wash Trading

The cryptocurrency market is changing for the better, according to research from the Blockchain Transparency Institute. In their latest Market Surveillance Report, BTI revealed that numerous exchanges are cooperating with its verified program to stamp outwash trading.

The program has helped successfully detect and shut down wash trading accounts on many exchanges, contributing to a drop in global wash trading of “35.7% among the real Top-40 exchanges.”

The “cleanest exchanges” listed by the program are Kraken, Poloniex, Coinbase, and UpBit. OKEx and Bibox have the highest levels of apparent wash trading amongst the top 40 included exchanges, with up to 75 percent fake volume.

One might assume that stronger regulatory frameworks have forced exchanges to move away from suspicious trading activities, but even highly-regulated exchanges may be tempted to inflate their volumes to attract more traders. On Bithumb, based in South Korea, wash trading accounts for up to 90% of trading volume for Dash and Monero, the report alleges.

While wash trading is deceptive to investors, it’s not always a sign of malice on the part of exchanges. Many marketplaces, like OKEx, make it a practice to attract high-frequency traders with lower fees or other incentives. By doing so, they may inadvertently incentivize traders to fudge their numbers.

On the other hand, some exchanges do see wash trading as an easy way to move up the rankings.  “For $1,000 a month, wash trading firms will inflate volumes by a few million dollars,” an exchange head told reported, although it’s not clear how well these companies have survived the bear market.

Plenty Of Work Left To Be Done…

There are still 73 exchanges in the top-100 on CoinMarketCap with wash trading volumes greater than 90 percent, according to the BTI. Wash trading bots are detected through “repetitious buying patterns” as well as through observations of “flat volume bars and/or irregular candle formations.”  These same exchanges exhibit frequent spoofing, or “ghost orders and trade executions” that create the illusion of trading activity.

According to the report, wash trading of Bitcoin, Ethereum, XRP, and Litecoin occurs on some of the top-40 exchanges. The most heavily wash-traded tokens are Ethereum Classic, Monero, and Dash.

But things have improved since the last BTI report, and the Institute has been busy adding newly-compliant exchanges to the Verified program. Binance, Gemini, Bitflyer, and Indodax have recently been added after improving their wash trading stats over the past year. All of these exchanges now exhibit less than 10% wash trading volume.

However, “there is still work to be done in the cryptocurrency market,” the report concludes. Fake trading volumes significantly distort the market picture, thereby misleading investors.”

Exchange news

Binance Research: Margin trading could boost asset allocation efficiency

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Binance Research- Margin trading could boost asset allocation efficiency
Margin trading could boost asset allocation efficiency

The research team at the Changpeng Zhao-led cryptocurrency exchange, Binance, recently published its November Markets Overview report. It expanded on how the Binance Research team looked into Bitcoin Cash’s impact on order book structure after it was added for margin trading earlier this year, in August.

Detailing the process, the report explained how the team aggregated the percentile-based bid and ask quantities for each of the BCH pairs at various high-frequency snapshots of the order books. Subsequently, the team inspected the lowest 5% percentile among snapshots between 2 September and 25 November forbids, asked aggregated order book quantities, and plotted the cumulative quantities at a daily frequency.

According to Binance Research, cumulative quantity size on the buy-side increased following the addition of BCH to the margin trading platform. Further, the platform noted how between 2 September and 5 November, the 10% cumulative buy quantity increased by nearly 33%, moving approximately from around 3,000 BCH to 4000 BCH.

However, Binance Research made sure to mention that the increase in the cumulative ask quantity was even more notable, with an increase in the 10% cumulative sell quantity of 50%, from around 4,000 BCH to 6,000 BCH. The team also noted that in the same period, the 10% cumulative ask quantity spiked above 10,000 BCH on two occasions: 5 November and 18 November.

The report added that margin trading could potentially lead to greater efficiency in how resources are allocated within the Binance exchange as market participants carrying a negative sentiment could hold short positions by borrowing assets from long position ‘hodlers’ through lending.

“This rise in both buy and sell side depths for BCH markets illustrate the overall positive effect on the liquidity profile on assets when greater price discovery becomes possible.”

The Binance Research team added that the support of new assets for margin trading will allow for improved price discovery for many other cryptocurrencies in the months to come.

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Bitcoin News

Bitcoin Worth $313 Million Was Sent from Bittrex Exchange to Unknown Wallet

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Bitcoin Worth $313 Million Was Sent from Bittrex Exchange to Unknown Wallet

Early Wednesday morning, 43,564 BTC – worth more than $313 million at current prices – was withdrawn from Bittrex to an unknown wallet. To put that in perspective, it’s almost as much as the daily trading volume of Bitfinex and Coinbase combined.

$313 Million Sent only for $1: Try That With Fiat

What is remarkable about this particular transaction – aside from the size – is that the fee to transfer that much Bitcoin was only $1. You can’t even buy a cup of decent coffee for $1 anymore, let alone transfer millions of dollars in fiat currency.

$313 Million Sent for $1 - Try That With Fiat

Now compare that to trying to wire fiat currency. Depending on the amount being transferred, you could pay thousands in ‘hidden’ fees on top of a transfer fee that is 10 – 20x greater – or more – than that of Bitcoin. For example, if you were to try to send $313,000 – 0.1% of the Bitcoin transaction – from the US to the UK using Transferwise, you would pay over $1200 in fees.

Fiat money transfers vs Bitcoin transfers

Possible Reasons Behind the Huge Transaction

The question on many people’s minds isn’t so much who withdrew such a huge amount of Bitcoin, but rather, why did the transaction take place?

Was Bittrex hacked?

Is there any relation to the recent Bitcoin price manipulation where the price spiked 8% just to retrace 10% hours after?

Did the whale decide not to dump his Bitcoins on the market? This, by the way, could be a bullish sign.

The consensus is that something is not quite right about the transaction. The receiving Bitcoin address is brand new, with only two transactions in its wallet history. That in and of itself isn’t all that odd, but as at least one Twitter user noted, there was no test transaction.

You would think that with a transaction this size, that the user would send a small test transaction to verify that they entered the correct receiving address.

Other crypto Twitter users have speculated that the transaction is just Bittrex transferring bitcoins from its hot wallet to its cold wallet.

Recent data from BitUniverse shows that Bittrex has approximately 131,340 BTC in its reserves, meaning that if it was an internal transfer, then Bittrex just moved a third of its total BTC reserves into its cold wallet.

Requests asking Bittrex to confirm the legitimacy of the transaction have thus far gone unanswered.

Huge Bitcoin transactions are very rare, but even more rare are huge transactions to or from an exchange. In June 2019, a huge $101 million worth of Bitcoin was sent to Coinbase. In December 2018, a $257 was sent from an inactive address. Whale transactions are not limited to Bitcoin only: Last February, $100 million worth of Ethereum was delivered to Binance.

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Blockchain News

Binance CEO: Turkey Among Most Crypto Progressive Countries

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Binance CEO: Turkey Among Most Crypto Progressive Countries

Binance CEO Changpeng Zhao has lauded the role of the Turkish public and government in the development of the blockchain sector and has said that Turkey has one of the fastest crypto usage growth in the world. He made these remarks on the outlook of the industry in the country after the Turkish Capital Markets Summit held in Istanbul.

During the course of the interview, CZ touched on a variety of topics including the popularity of cryptocurrencies in the country and the recent increase in interest due to the inflation figures. He noted that Turkey Localbitcoins.com experienced record level trading in 2018 when the US placed sanctions on the country due to an ongoing diplomatic row.

CZ praised the general awareness and understanding of the industry in the Turkish populace as well as their openness to new ideas and innovations within the new industry itself. The move is expected to garner further interest in cryptocurrencies in the country which is the only country in the Middle East that has progressively allowed cryptocurrency trading and ownership along with the United Arab Emirates.

 

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