Bitcoin Futures Volume Is More Significant Than You Think, Bitwise Says

The bitcoin futures market is far larger, relative to the spot market, than previously thought, says Bitwise Asset Management.

In a wide-ranging report which claims 95 percent of all reported bitcoin trading volume is faked, Bitwise says that nevertheless, the bitcoin "Futures market is significant" when viewed in light of the remaining, genuine 5 percent of spot trading that occurs at regulated exchanges.

CoinMarketCap, one of the most prominent sources of crypto trading information, says the bitcoin market's average daily volume is roughly $6 billion, but Bitwise argues that, going by its own methodology, the actual average daily bitcoin trading volume is only $273 million.

This discrepancy means that the futures trading volume reported by the major Chicago exchanges, CME Group and Cboe, has a far greater impact on the market than previously thought, according to Bitwise.

The average daily futures volume on CME and Cboe combined totals near $85 million, which is not too far off from the average daily spot volume of $110 million on Binance, the exchange which performs the largest number of legitimate trades, according to Bitwise.

Futures aside, the true spot market for bitcoin essentially exists on 10 different exchanges conducting nearly $300 million in daily trading volume, Bitwise says.

Notably, Bitwise says that the U.S. is responsible for a larger portion of the genuine bitcoin spot market than previously thought,.

"The pattern you see fits natural human behavior: People are more likely to trade small amounts of bitcoin than large amounts of bitcoin, and more likely to trade whole bitcoin than fractions of bitcoin."

The fact that Bitwise just told the SEC that 95 percent of all bitcoin trading volume is faked is not an issue for Bitwise's bitcoin ETF proposal, Hougan said.

The regulated CME futures market represents is much more significant than most people think," Hougan added.