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The Korean exchange Bithumb reported volumes higher than 10 times its summer averages at the beginning of November.
CryptoExchangeRanks.com, a research company linked with Hacken, has decided to examine the data. They made the report available to CCN and it is at the bottom of this article.
Interesting models were discovered when Bithumb's business models were put under a microscope. The researchers stopped commercial activity in three periods: from August 25th to October 7th, from October 8th to November 11th and the third period, November 12th.th to date.
During the first period, they discovered that more or less the same period of time, most of Bithumb's Bitcoin exchanges took place in the space of an hour.
Between 90 and 95% of the daily trading volume at Bithumb took place around 11:00 am each day. As the researchers write, he created a "comb" model in the table above. That table is the hourly volume for the month of September.
During the second period beginning October 8, Bithumb's volumes divorced from the price movement of the same period, publishing irregular volumes on a regular basis. On October 8, the daily volume was 22,000 BTC, while on 6 November they recorded over 100,000 BTCs in commercial volume.
The volume did not correspond to significant price movements
November 12thth, the volume was just over 1,500 BTC. If this volume is not false, the researchers conclude, so it is highly irregular. Something is not right with this, to say the least. If such a trading activity had been seen on a regulated mercantile exchange of the old world financial system, regulators would be interested, to put it mildly.
An interesting thing to note is that after November 12th, the price of Bitcoin has dropped by almost $ 1,000. It was the start of the slide for over $ 6,500 at today's current levels. Generally, any major price movement will stimulate the volume, regardless of the direction. People will panic and people will seize buying opportunities. Even when people are not responsible for decisions, trading bots will take advantage of price movements. Again, they will do it regardless of price dynamics. In addition, preconfigured negotiations are often activated when unexpected price changes occur. But a slip of hundreds and hundreds of dollars did nothing to bring Bithumb's volume back to its highest precedents. The volume following November 12 was what researchers consider "natural" levels.
The researchers calculated the average size of the Bithumb trade and noted that it drastically increased during the periods studied. At the start of the summer, the average trade at Bithumb was around 21 BTCs before the first period studied.
During the first period, it increased to more than 1.8 BTC. The second period saw even greater increases, at over 5.8 BTC per trade. In real terms, this would mean that even the lows of the average traded more than $ 4,000 BTC in each exchange – all of a sudden.
Also, before the first period, only a handful of operations (around 200) were more than 2 BTCs. Yet the average the commercial dimension just a month or more later is more than twice that amount. The following table shows the BTC / KRW negotiations on Bithumb for September 9thth. The period that increases the average and is significantly higher lasted only 5 minutes.
This trend should be repeated every day for the next 30 or more days. In the particular example above, 39% of daily transactions were conducted over that five-minute period for a total of over 34,000 BTC, which accounts for almost the entire volume reported by Bithumb that day.
Fast forward until the day before the point of delivery, which is also the day when Bitcoin prices have started to slip. The following pie chart shows the average transaction size during a period of one hour which started at 3am local time. IT is far superior to the normal size of the transaction on the same exchange.
Waltonchain (WTC) pumped and exchanged during the same period
All couples traded on Bithumb have seen similar trading models at various times, though never all at once. Thus, the volume ultimately reported in places like CoinMarketCap was not only representative of Bitcoin / fiat pairs, but also the pairs offered on various altcoins, further inflating the figures. The token that stands out among them, according to the report, is Waltonchain. As the authors of the reports write:
The WTC stands out from all the coins we have observed, as only the exchange was quoted on the last day of August and had the shortest period between the pumps, which began on October 28 and lasted until 11 November. For that reason, his pump was one of the most intense. The inflated daily volume of Waltonchain rose 350 times from 348k WTC (on average before the pump) to 122.5 million WTC (on average during the pump) only to then decrease by 1,450 times in one day from 206.7 million WTC at 141.8k WTC on November 12th.
Waltonchain is an independent blockchain implementation targeting merchant industries and other large industries to track units using RFIDs. It allows factories or companies to create their own sidechain to track the various data related to their goods. He periodically saw large pumps, but there was not much drive in the business started in the periods described.
According to the report, Monero and ZEC appear to have been exempted from the fluffing that was occurring in other markets:
Interestingly, in contrast to other pumped coins, the XMR and ZEC volume did not fall to pre-pump levels on 12 November. While the XMR volume maintained the average daily values of the "second period" after sliding down from the peak, the ZEC volume also slipped from the peak but fell to August levels on November 19, soaring the next day in the middle of the "second period" average "Value and fell again on November 21. The ATS performance of both currencies was in line with the trends in the volume of trade.
Average size of trade Huge increases: most of the conclusive tests
The conclusions of the report are difficult to refute because they are based on comprehensive research and publicly available data. The bottom line is that it is possible to see massive volume peaks, especially during price fluctuations, but it is unlikely that Bithumb's client class has intervened for a few minutes or a few hours a day and has traded more than 8 times the average previous trading dimension.
As "average" numbers increase in this way, change should at least be sustained in some way over a long period of time. However, the smaller pre-existing trading dimensions would neglect the average over time, so it would be a healthier sign.
The reader might wonder why Bithumb would like to inflate their volumes, which this reporter does not find convincing enough to say absolutely for sure. Some internal losses would be necessary to verify it.
The answer to why they could, however, is simple: in the exchange wars, the volume is the king. Binance is the dominant exchange precisely because it is a magnet all over the world. It has dozens of dozen trading pairs and leads a massive amount of trades on a daily basis. Traders often believe they get the most representative rate on the exchange with the largest volume in a given token. Often, the total volume of Binance in USD is almost double that of its nearest competitor.
Also being the closest competitor is a lucrative position to enter, and Bithumb often appears in the top 10 not far behind Binance. We contacted Bithumb to comment on this article. After a whole day we had not heard anything yet, but we will update this story if they send a comment.
Volume Bithumb report of phm.link on Scribd
Shutterstock foreground image. Thanks to CryptoExchangeRanks.com for more information.
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