Analyzing Currency Inflows into the Crypto Market (and Stablecoins)

Many believe that an influx of stablecoins is a bullish sign for the markets.

However, this often tends to not be the case. Let’s go ahead and revisit our current flow analysis from a few months ago.

The tweet below (from the CEO of Zerononcense), details the shift in dominant currencies in the 24 hours before an immediate and sudden drop in the markets:

What are we seeing here?

A few notable things:

  1. Korean Won was much more dominant in the 24 hours before the market had cratered than it had been in over a year.
  2. The Korean Won’s sudden domination in the market dropped abruptly, with a sharp increase in the proportion of Tether (in relation to other currencies) being placed in its stead.
  3. Since this event, Korean Won volume has paled in comparison to USD, USDT, and EUR.
  4. Since this event, the only dominant currencies have been USD and USDT.

Looking at Fake Volume Produced by Stablecoins in the Markets

Most have heard that there is a lot of fake volume in the markets. But few have heard of the fact that a lot of the fake volume has been created through stablecoin/stablecoin markets.

Let’s start by taking a look at the ‘reported volume’ on CMC (there are more steps, just remain patient):

We’re going to the ‘reported volume’ because that’s where we can see the ‘raw data’ as it's reported by exchanges (fake and all)

CMC adjusts these numbers (not sure exactly how or what they do to deem what is considered ‘real’ volume), and that is what is pushed under its ‘adjusted volume’ list for exchanges.

*Note: The data that we will be looking at is from April 9th, 2019

If we take a look at the ‘reported volume’ of exchanges, we can see that BitMax is listed at #1 with an absurd $3B in 24H volume (keep in mind that this exchange launched in July 2018).

It goes without saying that the vast majority of this volume is fake. Partially due to the transaction mining that they have on their exchange (of course) and partially due to the fact that there are no KYC/AML requirements to trade on the exchange.

In addition, we’ve already covered BitMax’s reserves (in total), and between $BTC and $ETH, they had less than $3M on hand (that’s included their cold wallets too).

Identifying BitMax Ethereum and Bitcoin Wallets

Bitcoin Cluster Addresses for Bitmax

Cold Wallet for BitMax (cluster address) =

Hot Wallet for BitMax (cluster address) =

Ethereum (Hot and Cold) Wallet Addresses for BitMax

Ethereum Hot Wallet =

Ethereum Cold Wallet =

Additional Considerations as it Relates to BitMax’s Fake Volume

Also, keep in mind that their reported volume is nearly 3x what is being reported by Binance. Even at the height of Binance’s IEO craze, they weren’t putting up $3B in 24H volume on the board.

So to drill this point home, BitMax’s volume is clearly fake and exaggerated to a large extent.

But this is also not what we’re here to look at.

We’re going to take a look at the top traded markets for BitMax (BitMax is not even the focus of this investigation; stablecoins are)

Looking at the Top Markets for BitMax

Above are the reported volumes for the top markets on BitMax as of April 9th, 2019.

The most glaringly obvious aberration in the data are the two top markets, which boast significantly greater trading volume than all of the other traded pairs on BitMax, combined.

The two top markets (stablecoin/stablecoin) make up 97.21% of BitMax’s reported $3B in volume (not actual, but reported; keep that in mind).

It is also worth noting that only the top two markets are given a ‘transaction mining’ label on CoinMarketCap.

A Look at FCoin’s Top Markets (as of April 9th, 2019)

These are FCoin’s top markets and their reported volumes

We decided to take a look at FCoin next (following BitMax), because FCoin’s reported volume was the most in the crypto space on April 9th, 2019, right behind BitMax.

Again, in the picture above, we can see that USDT pairings dominate the list for top markets on FCoin.

Taking a Look at Tether’s Top Markets

Above are the top traded pairs for Tether (USDT) as of April 9th, 2019.


In light of the Bitwise report that came out recently proclaiming that the majority of exchange volume is fake, it seems reasonable that researchers in the crypto space would take that information as a lead and use it to start digging into alternative markets to either verify or deny these claims.

Based on the information provided above as well as what has been gleaned from additional research, Zerononcense firmly concludes that the majority of wash trading, spoofing and ‘fake volume’ in the crypto markets are perpetuated by stablecoins, specifically.

This is not to say that there are no other coordinating entities participating in this behavior — but for the most part, it appears as though this is largely attributed to stablecoins, specifically USDT (Tether).

Hopefully, this information serves as helpful to all other observers and purveyors of the crypto space.

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