It was reported that 60% of the trading value of Tether is exchanged in Chinese exchange houses. Analysts consider that regulated and unregulated exchanges have similar markets.
The Tether market in China could be proof that the Bitcoin trading volume is not as manipulated as the Bitwise firm claims. This is suggested by the digital currency industry magazine Diar, based on studies conducted by Chainalysis in Chinese exchange houses.
A few months ago, Bitwise stated that 95% of the Bitcoin trading volume was false. The firm, which plans to launch a Bitcoin ETF (exchange-traded fund) in the United States, compared 100 exchange houses, concluding that only 10 regulated platforms provided reliable information.
Several exchange houses accused of market manipulation are originally from China. The studies suggested that the volume of transactions was “artificial” and its purchase-sale transactions were “unrecognizable”. However, researchers of the magazine Diar have questioned this premise, considering that the possible manipulation of the Bitcoin trading volume does not have such a high percentage.
The analysts used a recent study of Chainalysis, dedicated to the Tether market, in order to support this assumption. The firm indicates that Tether reached its historical maximum trading volume in the second quarter of 2019. The anchored cryptocurrency has exceeded US $10 billion in sales so far this year and most of those operations have been processed by Chinese exchange houses.
They estimate that unregulated Chinese exchange houses have constituted 60% of the total value of Tether transactions until now this year. Demand in this region has been increasing over time, thus decreasing Tether trading transactions in the United States. Nowadays, less than 10% are made in regulated exchange houses in that country.
The analysts of the magazine Diar indicate that the concentration of Tether trading in China may be due to the fact that these exchange houses have higher demand and, therefore, better liquidity. They also suggested that investors worldwide could have migrated to these exchange houses to do marketing activities.
Manipulation of Bitcoin Market
The researchers say that, although Tether and Bitcoin are not the same, they are not comparing very different markets. In this sense, they consider that the Tether data may indicate that the cryptocurrency market is not as manipulated as Bitwise claims.
They believe that Tether transactions in Chinese exchange houses are legitimate. The volume of transactions of the blockchain has increased jointly with the operations reported by these platforms.
Exchange houses also record frequent Tether inflow and outflow, a move made by companies to safeguard cryptocurrencies against possible cyber attacks. Analysts found no differences in this behavior when evaluating regulated US exchange houses. In other words, those platforms selected by Bitwise as trustworthy have Tether markets analogous to those that are unregulated.
The researchers of Diar indicate that these data cannot prove the innocence of the unregulated exchange houses regarding the manipulation of markets such as Bitcoin. However, it does not confirm the hypothesis of money laundering or false volume. Because of this, they speculate that the percentage of manipulation of the cryptocurrency market could be much lower than the 95% proposed by Bitwise.
By Willmen Blanco