When you guys trade BTC you need to take into account all the major markets such as BitFinex, BitStamp, OKCoin and BTCChina.
Problem is that the USD/CNY exchange rate differs and its hard to find a perfect long/short on all the different bitcoin markets.
BTCChina is by far the largest and should get the most importance.
Actually the largest markets are OKCoin (varies around 30'000 BTC/day) and Huobi (about 15'000 BTC/day).
BTCChina was big during the October and November rallies, with 50'000 BTC/day or more, but then lost almost all its volume when it lost its bank accounts (around Dec/19) and has been struggling to recover since then. It is still at abut 1/10 of that.
There are a few other exchanges in China, but there is almost no data about them. Earlier this year the five largest together may have had as much volume as Huobi or OKCoin; but two of them, at least, closed in April-May.
Bitstamp, Bitfinex, and BTC-e have even smaller volume than BTC-China.
It is often said that the volume at Huobi and OKCoin shoudl be ignored because it is "misleading" or even "fake". Yet there is little evdence of "fake" trades there, but some evidence that the trade is quite real.
Yes, sure, one of the reasons why OKCoin and Huobi have so much volume is that they do not charge trading fees. That does not make their volume less legitimate. Yes, sure, zero fees induce traders to do more trading, but also attarct and keep more traders; and a trader that trades 10 times per day is not much different than10 traders who trade once a day.
(There is a question of how deep the order books are, but no one knows the "real" order book of any exchange -- namely, the amount of coins and money sitting on traders' accounts or their "cold wallets" outside the exchange, not on the order book but ready to jump in if the price changes enough.)
One could turn the "zero fee" argument around and say that trading fees depress trading, create an artificially wide spread, prevents the price from tracking small movements in other exchanges, obscures trends, etc.; so one should disregard from analysis any exchange that charges trading fees.
Anyway, whatever one thinks of zero fee volume, it is beyond obvious that all the major changes in the price since November, if not since last April, were generated by the Chinese traders reacting to events that were relevant to them , with little influence of events and markets outside China. The price is usually stable when it is late night in China, and starts moving when it is 07:00 or 08:00 am there. The price was still during the week in early February when Chinese banks were closed, and started dropping as soon as they opened. It is often hard to tell which exchange led a particular crash or rally (since arbitrage robots usually propagate the change in less than a minute); but, when there is a clear leader, it is almost always Huobi or OKCoin. And so on.
The myth of "fake volume" is commonly repeated because it helps hide the unpleasant fact that the price is sustained at the current levels only by the Chinese traders, and its future is entirely at their mercy. Obviously, that fact would make bitcoin-backed funds very hard to sell.
"By investing in our fund, you will place your savings in the hands of thousands upon thousands of Chinese amateur day-traders, who have embraced bitcoin as their favorite item of speculation last year, and still show no sign of getting tired of it, dumping all their coins, and moving on to something else."
"The outlook for our fund is quite bright for this year. We have consulted someone who has a former high-school friend who now lives in Seoul, which is a city not far from China, and he has no information about any plans of the PBoC closing any exchanges next week. Assuming that said state of affairs will persist for the following 51 weeks, the value of our shares is expected to maintain the same level of stability that it has maintained in the last six months."
"Bitcoin has made exciting progress this year, with hundreds of stores now accepting doll bitcoins, several bitcoin funds being announced, and -- finally -- categorical statements by leading Wall Observer Street figures that NASDAQ trading maybe perhaps will be authorized by the SEC at some point in the future. Even though none of that matters to the Chinese day traders who will set the value of our shares, we felt that our clients would be pleased to know about it."
You get the idea. That is why OKCoin and Huobi
must be declared irrelevant and omitted from any statistics.
