Bithumb has become the largest exchange of cryptocurrencies through "incentive trading": report

South Korean cryptocurrency change Bithumb has recently become the number one cryptocurrency swap exchange trade, which has traded an average of $ 1.2 billion a day. Worryingly, the number of visitors has decreased.

According to the November CryptoCompare Exchange, Bithumb's average daily volumes have increased by more than 280% from USD 323 million (September / October) to USD 1.2 billion (October / November), while the daily unique visitors to the exchange decreased by almost 20%.

Bithumb is not the only exchange that sees this kind of trend. For the report, Coinbene and CoinTiger showed similar trends, as shown in Figure 19, their volumes increased despite the decrease in traffic.

The case of Bithumb is different, however, since it has become the largest exchange encrypted by volume, despite having just over 5,000 users a day. In comparison, Binance had 67,200 unique visitors per day and an average daily trading volume of $ 600 million.

According to the report, Bithumb's volume has improved so drastically that it saw the volume of BTC trading swooped at Won (KRW) by 288% from last month, while the volume of BTC in USD and JPY fell respectively by 16% and 30%. This means that BTC / KRW has gone from about 10% of the total volume of BTC to Fiat, to 46%, as shown in Figure 7, making KRW the biggest pair of fiat at Bitcoin last month:

Bithumb's business volumes increased after the Singapore-based BK Global Consortium acquired a $ 350 million share of the stock market. Reportedly, the organization has implemented a "series of air races, lotteries, discounts and other programs" to attract non-Korean users.

Per CryptoCompare's report, Bithumb also implemented the controversial trans-fee mining model, as some users who managed to trade specific trading volumes were subsequently rewarded with "Bithumb Cash." Trans-fee mining exchanges often have, as previously reported, thin order books and low traffic volumes compared to their relatively high volumes.

As reported by the CryptoCompare report:

"An increase in volume on an exchange, combined with a decrease in visitors, could point to incentive programs such as competitions, paid extraction, discount programs or the like".

A Shaky cable

As reported, Bithumb's trading volumes indicated that trading activity was in progress, as its graphs showed that consistent orders – on average $ 2,750 (the second largest of each exchange) – were made and quickly filled up at short intervals on various trading pairs. High volumes on the markets with low orders indicate that large orders are executed against a counterpart who agrees to take the other side of the trade, otherwise these large orders would cause a significant shift.

The trade registers proved unstable, as the analysis showed that it would take only 0.008% of the daily trade volume of the XMR / KRW pair of trades to lower the market price by 10%. The exchange also had a segment of "today's currency" that apparently saw random cryptocurrency pumps on the platform, while losing value in the rest of the market.

In particular, only three days after CryptoGlobe reported the suspicious activity of Bithumb, its trading volumes have declined, as the CryptoCompare report notes "from November 11, trading decreased considerably".

Bithumb Promotions

The CryptoCompare report on Exchange Review notes that a Bithumb volume analysis shows that the promotional events of "Super Airdrop Festival" and "Special Gift" are behind the volume of irregular exchanges.

As reported, last month Bithumb had a 120% cost recovery promotion, which saw users essentially wash the trade against themselves to raise an additional 20% on their volume from the commissions that the exchange was paying. There was a repayment limit set at $ 150,000 per day.

The hourly volume chart below shows that one of the users pointed to the promotion and managed to request the full daily reward with a small number of precise trades. This activity explains the large volume peaks of hourly exchanges.

He also launched his decentralized exchange (DEX) this year. The DEX was showing huge commercial volumes at the time of our relationship. So much so that its higher trading pair, CXTC / ETH, showed that over 25,000 ETHs had changed in a day, although the available data showed that the total volume of CXTC exchanges was 310 ETHs on other platforms. Currently, the trading volume of the same pair is zero on the exchange.

It is interesting to note that in June this year the exchange saw the hackers steal KRW 35 billion ($ 31.5 million) from his wallets, and at the time he was forced to freeze deposits and withdrawals, which they were reopened at the beginning of August.

The shaky role of Bithumb as a number one cryptocurrency exchange and suspicious trading activity has seen CryptoCompare drop it from its aggregate price index (the CCCAGG).