Today Chinese exchanges report 98% of global volume. This shows huge dominance by Chinese markets. Unfortunately we know that most of this volume is fake.
Why is it fake?
Unlike the rest of the world, Chinese exchanges are unique in that they do not charge fees on trades. Instead they make their money via withdrawal charges out of the exchange. These fees reduce as your trading volume increase, so this incentivises traders to rack up their trade volume via buying and selling from themselves at zero cost.
There’s a ocean of data coming from the markets, and they hold hidden secrets. In this study, I’ll peer into the data and attempt, as far as I know, the first estimate of true Chinese volumes using data driven methods. I’ll define “true volume” as what the volumes would have been, had their markets actually charged at trading fee.
Prior estimates, really just educated guesses, have put Chinese volumes at 50% of the global market, let’s see how well this compares with the data.Leave a Comment