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Comment by modeless | Hacker News Reader

This is by far the best analysis of the Bitcoin market I have ever seen. Super interesting. As the Twitter thread mentions, this could actually be good news in the eyes of regulators as it means the Bitcoin price is likely controlled almost entirely by legitimate trading on legal and regulated exchanges rather than the fly-by-night places that are faking their volume.

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Well, the study shows that there are legit exchanges, so there is some place for the usual market forces to apply (and indeed, the price of Bitcoin on these exchanges lies in a tight band, too small for arbitrage opportunities). That doesn’t mean the price of Bitcoin can’t be manipulated by pump & dump or other price manipulation schemes.

But still, the study (at least the highlights given in the twitter thread) looks solid and well-presented.

pump and dump can take place in small cap equities as well. it will never be impossible - the thing thats needed is the regulation / surveillance to do enforcement on those who perpetrate it

The difference is here it’s totally legal and an intrinsic part of the decentralized, deregulated coin ecosystem. It is bitcoin.

I expect the bitcoin case will remain dubious to the SEC because Bitcoin has no fundamentals. I.e no relationship to anything tangible.

Further, volume on unregulated exchanges does effect price on regulated ones ... so you don’t have to manipulate a regulated exchange to move price.

Really what crypto needs is a trustless blockchain based exchange. Something like an Ethereum based limit order book. Then no other exchange is relevant.

These already exist, eg. Idex and other distributed exchanges.

People use them - Idex is one of the most-used Ethereum dApps - but they suffer from ease-of-use problems. Either you go through a web interface (which defeats the purpose of them being decentralized, since you have to trust the website you're making the trades on) or you put up with the hassle of sending individual transactions to smart contracts with your Ethereum wallet, which is pretty error-prone for most ordinary users.

money is consensus and not backed by anything other than a government promise. bitcoin is backed by hash power = money. it's 2019 we are past tulip phase. you can pay taxes in usa with it.

You could also pay taxes with tulips, if you exchanged them for the correct currency, yeah...?

The government promise that it will be directly accepted as payment for taxes, and to settle judgments in it's courts. That's a lot of backing, not a triviality that can be dismissed.

But you can't pay your US taxes or judgements in Yen or Euros either. In that way, it's no different from the standpoint of a US citizen to any other alternate currency.

What other analyses have you read? This was one of the worst "research" resources I read. Did they write off all exchanges that they identified to show abnormal trading patterns? Huobi and Bitmex are considered to trade $0 according to this research? This is a waste of everyone's time.

BitMEX is not a spot exchange. Huobi fakes volume.

Yes, it's widely known exchanges wash trade. This does not mean that all their volume is fake. And it's true mex only trades contracts, but I'd note they're traded only with BTC collateral so bitcoin is still exchanged.

For the most part, this report basically ignores Asian exchange volume.

It's likely that a vast majority of their volume is fake. Why would you fake it to add 10%? In the absence of real numbers, treating it as 0 is likely more accurate than taking it at face value.

It would certainly be interesting to see an analysis of BitMEX.

Unregulated exchanges fake volume to stay competitive with the other unregulated exchanges. Treating those as 0 means you may as well say "only 5% of exchange volume is traded on regulated exchanges, and we don't have the slightest clue about the rest."

You can't pass this drivel as research.

Re BitMEX it wasn’t included in this report because the report focuses on spot markets but agree it’s very relevant and will be the topic of future research.

Re Huobi, there is strong evidence of material falsified

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