Tether [USDT] has been a topic that has been voraciously discussed across the board lately, with the Bitfinex-Tether scandal providing the ground for the controversy surrounding the stablecoin. Another controversial topic in the cryptocurrency industry was the issue of fake transaction volumes on many of the popular cryptocurrency exchanges.
The magnitude of the topic was so large that even Changpeng Zhao, the Chief Executive Officer [CEO] of Binance had raised red flags. This topic and Tether as a whole received another twist when Larry Cermack, the Director of Research at The Block, pointed out a few parameters when it came to the said volume. Cermak’s first tweet read:
“Can we please all admit that total USDT volume is a completely irrelevant metric? Just as total BTC/ETH/XRP volume. To show why I made a quick chart of what exchanges have the most Tether volume at the moment. How many of these have you guys even heard of? Maybe 10?”
The major exchanges in question were DOBI Exchange, BW, BitForex, OEX, CoinBene, IDAXm LAOKEN, Bit-Z, Bibox, and Coineal. According to The Block official, these exchanges did not just contain fake volumes, but were was illegitimately portraying 95 percent of the entire volume. Cermak further added:
“About 20% of USDT volume comes from OKEx DigiFinex, Huobi, HitBTC and ZB. These exchanges at least have “some” real volume but likely very very little as well. Based on my estimation, only about 5% of the total Tether volume is coming from exchanges that don’t fake the majority of the volume. And if I were to make an educated guess, at any given time, only a maximum of 15% of the total Tether volume is real.”
The ongoing issue had become such a major issue that CoinGecko even launched a feature called ‘Trust Score’ in a bid to combat fake trading volume by injecting liquidity using online traffic and order-book data. The data obtained from websites such as SimilarWeb was proposed to be used as it was much more difficult to fake web traffic statistics aggregated by third-party services.
Keeping in tandem with his research, Larry Cermak concluded that the exchanges which did not fake much volume included major players like Binance and Bitstamp, while exchanges like Huobi and HitBTC were branded as ‘likely fake but not the majority’.
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Fall in Bitcoin’s market dominance may be correlated to the fortunes of the altcoin market
The trends set by virtual assets have always highlighted the cryptocurrency market’s inherent volatility and spontaneity. Prices lack symmetry and rarely exhibit consistent growth as different factors come into play to dictate an asset’s valuation.
At press time, the world’s largest crypto, Bitcoin, had stormed past the $11,000 mark and was consolidating to push for a surge over $12,000. The rest of the altcoin market however, apart from one or two minor hikes here and there, has been relatively quiet after collectively surging in the early part of the year.
At the beginning of 2019, a significant number of crypto-assets performed significantly well in a group, wherein most assets demonstrated a prominent hike in their values with little to minor price corrections.
A majority of tokens doubled their valuation until Bitcoin breached the $6,600 resistance. Subsequently, altcoins failed to keep pace as Bitcoin continued to test more resistance limits in the market.
At present time, Bitcoin enjoyed an unprecedented 62 percent dominance in the cryptocurrency market. As its dominance primes itself to climb over the 63 percent mark, many in the community speculate this could be red flags for the altcoin market.
Major cryptocurrency enthusiasts and analysts have stated that altcoins could significantly capitulate if it so happens. However, past events offer a sliver of hope for the altcoin market.
According to CoinMarketCap, the altcoin market has been significantly affected whenever BTC’s dominance has fallen. During the bull run of 2017, Bitcoin enjoyed a dominance of 65 percent and the global market cap hit a value of $402 billion. However, in January 2018, when BTC dominance plummeted, the global market cap peaked at around $710 billion. The dominance was down by half, whereas the global market cap had almost doubled.
A major reason for the same was money funneling into other altcoins after witnessing a shift in momentum from Bitcoin to the rest of the crypto-market. The present market situation may take a similar path once BTC’s dominance falls, opening the door for other virtual assets to take advantage of the scenario.
However, the present rise of BTC is backed by much more certainty than the bull run of 2017. Hence, a repeat of the January 2018 period may be unlikely, and will happen if and only the market sentiment shifts gears drastically towards altcoins.
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