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A new analysis by Bitwise tells that 95% of the volume on unregulated exchanges selling Bitcoin (BTC) seems to be fake or without any economic value in nature, as the latest digital currency news show.

The cryptocurrency index fund provider Bitwise Asset Management came with the data, arguing in a report that is dated March 20th. Bitwise reported the data to the US Securities and Exchange Commission (SEC) as part of the proposed rule change for its application to launch a Bitcoin (BTC) Exchange Traded Fund (ETF).

As the analysis opens, there is around $6 billion in daily traded volume for Bitcoin across the spot markets. It further claims:

“Under the hood the exchanges that report the highest volumes are unrecognizable. The vast majority of this reported volume is fake and/or non-economic wash trading.”

Bitwise sources its data from the widely known statistics tracker CoinMarketCap (CMC) which claims to include a large amount of this suspect data, “thereby giving a fundamentally mistaken impression”  on the true size of the Bitcoin marketplace.

The claims also cite that 95% of the reported volume is fake and that the real market for BTC is “significantly smaller, more orderly, and more regulated than commonly understood” – which roughly amounts to $273 million.

After analyzing the regulated exchanges – using Coinbase Pro as a case study – Bitwise reveals the nature of the trading patterns that is trustworthy. The key characteristics include an “unequal and streaky” mix of red and green (sell and buy orders) whose distribution fluctuates considerably at any given time.

The report also cites that the trading patterns on Coinbase Pro reveal “a greater-than-random number of round trade sizes,” which it characterizes as “more natural,” typically human behavior. Bitwise noted:

“It’s [the spread is] $0.01. At the time this screenshot was taken, bitcoin was trading at $3,419. That means bitcoin was trading at a 0.
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0003% spread, making it amongst the tightest quoted spread of any financial instrument in the world.”

In the conclusion of Bitwise’s report you can see that the overall findings “demonstrate that this ETF application [for its Bitwise Bitcoin ETF Trust] meets both” of the conditions requested by the SEC on how a Bitcoin ETF could satisfy the requirements of the Exchange Act.