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Bitcoin [BTC] market resolute against manipulation, claims Bitwise report; dismisses SEC’s concerns

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Bitwise report claims Bitcoin market resolute against manipulation despite SEC Chairman’s concerns
Source: Pixabay

The purists in the traditional financial market realm have always believed that Bitcoin [BTC] can be controlled via a powerful computer network. A recent Bitwise report has, however, calmed allegations that the Bitcoin market is prone to market manipulation.

The report filed by Bitwise Asset Management was presented before the US Securities and Exchange Commission [SEC], in line with their recent application for a Bitcoin Exchange Traded Fund [ETF].

Market manipulation within the crypto-market has always been of concern to the SEC. The regulatory body in subsection 5 of Section 6(b) of the Exchange Act states that exchanges “are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade.” The SEC often cited this subsection while referring to the volatile industry as being prone to frauds and scams.

Bitwise gave two arguments to satisfy the SEC Exchange Act of 1934, namely, unique resistance against manipulation/fraud, and a surveillance sharing agreement with a regulated market of a certain size. The investment firm, based on historical cases, added that the regulated surveillance-sharing reason was of “primary consideration”.

The report claimed,

“That the bitcoin market is protective against manipulation, and critically, that there is a significant, regulated and surveilled market for bitcoin futures.”

Bitcoin: The Commodity

In their defense of the top cryptocurrency’s lack of susceptibility to market manipulation, Bitwise claimed that “Bitcoin is the first digital commodity in the history of the world.” Here, it should be noted that the report hails Bitcoin as a “commodity,” and not as an “asset”.

Bitwise drew three core divergences in the character of Bitcoin to other commodities. Firstly, Bitcoin is fungible, meaning that the cryptocurrency was constant, irrespective of location, unlike natural commodities like gold.

Secondly, Bitcoin can be easily transported via a computer network. Lastly, Bitcoin can be traded on an exchange, allowing users to directly view the price and employ trading strategies for the same. Furthermore, there is an absence of representatives, advisers, and consultants in the decentralized currency realm as anyone is free to trade.

It must be noted that all the exchange volume analysis is based on the figures of 10 exchanges as they record “actual volume,” according to Bitwise.  The exchanges on the list are Binance, Bitfinex, Kraken, Bitstamp, Coinbase, BitFlyer, Gemini, itBit, Bittrex, and Poloniex.

The report added,

“These unique features allow the bitcoin market to be uniquely resistant to manipulation in critical ways.”

Bitcoin: Anywhere, Anytime

Bitwise juxtaposed the ability of the top cryptocurrency to resist market manipulation to scandals that have plagued other markets over the past few years. The report highlighted four key incidents, including the LIBOR scandal of 2012, the Global Forex Scandal of 2013, the Gold Fix Scandal of 2014, and the ASIC Scandal of 2016.

In all the aforementioned scandals, the common elements were a deliberate attempt at manipulating the market by large financial institutions, resulting in heavy fines levied on the culprits.

The traits of fungibility and transportability in the virtual currency market allowed the creation of arbitrage in the market. The opportunities for investors to make a quick buck due to price disparity between exchanges was reported by Bitwise as being negligible.

Given this dominance of market participants, global liquidity can stand in the way of market manipulation, increasing the inability of the market to fall prey to any sort of voluntary change.



Bitcoin: The Distributed Market

Bitcoin’s spread of volume and “distributed market” will prevent one exchange from holding the coin’s price hostage. Of the ten exchanges considered, no one exchange had pure dominance in terms of BTC volume. Binance accounted for the highest volume, chalking up 40.47 percent, and was followed by Bitfinex and Kraken with 13.94 percent and 11.67 percent respectively.

The report concluded by saying,

“The spot bitcoin market is highly fractured amongst ten exchanges, and no exchange has a majority share. This contributes to bitcoin’s unique resistance to market manipulation, as any attempt to manipulate the market must either be coordinated synchronously across multiple exchanges or must involve a significant spike of volume on a single exchange.”





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Bitcoin’s [BTC] biggest threat is its users, not governments, says Bitcoin.org’s Cobra

Febin Jose

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Bitcoin’s [BTC] biggest threat is its users, not governments, says Bitcoin.org’s Cobra
Source: Pixabay

Bitcoin [BTC], the world’s largest cryptocurrency, saw a significant surge earlier this month, helping the coin break strong resistance at $5,000 and $5,200. Following the great fall of the king coin in early 2018, the Bitcoin ecosystem was struggling with scalability and technological issues, eventually leading to the hard fork.

Bitcoin.org’s Cobra, who is also the co-owner of Bitcointalk.org, has always maintained that Bitcoin was the cryptocurrency to look out for through his various Twitter bouts with prominent personalities in the cryptoverse. Due to his strong, unbridled support for Bitcoin, he has often trashed altcoins for their low market dominance.

In a new Twitter thread, Cobra spoke about the “biggest threat” to the Bitcoin ecosystem. Even though many crypto-enthusiasts believe that governments and technological issues were the biggest threats to the king coin, Cobra had a completely different opinion.

According to the Bitcoin maximalist, users have the potential to signal Bitcoin’s doom. His tweet read,

Source: Twitter

Source: Twitter

Though most Bitcoin supporters usually support his opinions, this tweet was met with a lot of resistance. Twitterati swarmed the thread in an attempt to prove him wrong. A user named @MrHodl alleged that this could not be true as Bitcoin had “no community.” He added that this, in turn, prevented toxicity in the ecosystem.

Cobra replied to the tweet stating,



“I think there is a community, it’s just not fully representative of everyone with a stake in Bitcoin. Most holders are quiet and not too familiar with what’s going on. There’s people with 1000+ BTC and they don’t engage at all with discussion platforms, just lurk.”

Some Twitter users took it as an attack on Bitcoin investors and opposed Cobra’s stance. A user @CarstenBKK commented,

“Maybe I am lost in translation. What do you wanna tell us? That you are part of Bitcoin network of people owning/using it, but you are just disgusted by the idea, that the network is called community in the sense of direct human collaboration and affection to the groups ideals?”

Previously, Cobra had accused Twitter’s Jack Dorsey and Square Crypto of pandering to Bitcoin users, while also suggesting that the crypto project was merely a way to bring in more users for Dorsey’s CashApp. His tweet read,

“Gotta respect how hard @sqcrypto is pandering to Bitcoiners. Very clever how @Jack has embedded himself in the community; in return the community promotes @CashApp, which gives that service a small but dedicated and activist group of early users.”





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