Bitwise responds to SEC delay with 100-page defence of Bitcoin market

26 May, 2019 | Updated: 27 May, 2019
by David Robb
Opinion
Bitwise responds to SEC delay with 100-page defence of Bitcoin market

In response to another postponed ETF decision from the SEC, Bitwise Asset Management has published an extensive defence of the Bitcoin spot trading market. The 100-page article attempts to correct many misconceptions about how the trading space operates.

On May 20, the SEC announced that it would need more time to decide whether it would be approving the rule change proposed by VanEck/SolidX in order to get their Bitcoin exchange-traded fund listed. 

Bitwise also had its own ETF decision delayed recently, and apparently sees a need to alter the perception of the Bitcoin market. In the introduction, it claims that many outside the space see it as "uniquely disorderly and inefficient, with wildly variant pricing and strange volume patterns that belie belief....This paper will show that public perception is wrong, anchored in a bygone era and built on a foundation of bad data and false assumptions".

The paper acknowledges that 95 percent of trading volume data is fake, but insists that this is not relevant, and claims that the market is "significantly smaller, more regulated, and more efficient than commonly understood...after you remove the fake volume and fake data from the equation, you are left with an extremely efficient and orderly market, and one that is backstopped by a regulated derivatives market of significant size...a market watched over by some of the
most sophisticated institutional market makers in the world, who entered the market to serve the increasingly institutional user base".

Bitwise apparently uses its own custom data sets, and these are much more reliable than the wash trading / fake volume reports that gives the market such a bad reputation. Binance, Bitfinex, and other leading exchanges all demonstrate relatively small variation in BTC prices, with a much higher representation of U.S.-based traders than is otherwise recorded.

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