Faked Exchange Trading Volumes Might Be Doom In Gloom but Bitcoin ETF Approval Could Be End Result
The cryptocurrency industry is patiently waiting for the approval of exchange-traded funds (ETFs) from the SEC. The securities regulator has withheld the applications from various organizations citing malpractice and unregulated markets as the main reason for not granting approval. The problems arise from the centralized third parties such as exchanges that are still prevalent in a decentralized technology to provide a gateway to fiat holders to purchase cryptocurrencies.
These exchanges are controlled by independent persons which open up room to manipulate the volumes shown on the platforms. In a report by Bitwise Asset Management, published by the SEC, over 95% of the volumes reported by the exchanges is not real. Bitcoin’s current actual spot volume stands at $273 million with the values given on the report. Such volumes make the market more acceptable to Bitcoin ETFs rather than negatively affecting awaited approval. Here’s why.
The Absurd Trading Volume Report To Push For An ETF Aproval
The current reported volumes of the CME and CBOE Bitcoin futures by Bitwise stand at $85 million USD representing a third of the actual BTC trading volume (spot). The two companies operate on a regulated and surveilled market and the huge market size offers hope for an ETF approval.
Comparing the trading volume of CBOE and CME bitcoin futures, $85 million to the actual spot volume of exchanges at slightly higher than $270 million USD, the ratio stands at 31.1 % of the total trading volumes on exchanges. While this represents only the two largest bitcoin futures market in the world today, there exist other futures markets across Europe and Asia. This shows a larger ratio in the market size of cryptocurrencies to support an ETF trading market.
The Similarities With Gold Spot Volumes
No denying that gold is the closest asset compared to the digital asset, Bitcoin in terms of storing value. Given gold’s market capitalization, currently at $6.7 trillion USD, and an actual spot volume of $37 billion the spot trading volume ratio is at 0.55% of the actual market cap. This figure is currently at 0.39% for Bitcoin with a $70 billion market capitalization and $270 million USD spot volume.
However, adding variables such as OTC markets and the bitcoin futures across the world, the percentage of trading volume to the total market capitalization will stand at slightly above 0.51%. This shows the increasing belief by institutional investors in Bitcoin despite the unregulated and manipulated markets.