For the second time this week, an Asian cryptocurrency exchange has described an unusual spike in trading volume. Gate.io’s daily trading volume rose to a peak of $4 billion on the evening of December 4. This is several times higher than the typical daily trading volume on Asian cryptocurrency exchanges.
The surge has already sparked controversy with the community behind so-called “animal tokens” called RATS, created on the Bitcoin blockchain using the BRC-20 protocol. Yesterday, the project publicly accused Gate of fake trading and called for a boycott of the exchange.
However, Gate attributes these odd trading volumes to market fluctuations that have thrown some of its clients’ trading strategies into disarray. “We have confirmed that this was the result of significant market movements that evening that caused problems for the trading strategies of some quantitative institutional users. Changes in strategies by institutional users during market volatility are common and do not impact the overall functionality of our platform,” a Gate spokesperson said.
HashKey Spike
That same week, news broke that daily trading volume on HashKey Exchange, a month-old exchange licensed in Hong Kong, had surged to $4.5 billion. This is significantly higher than usual levels in the field. HashKey said the surge was caused by a campaign promoting trading incentives that take the form of HSK tokens.
There is no suggestion that the two events are connected.
Introduced by developer Casey Rodarmor in early 2023, the Ordinals protocol set the stage for the emergence of Bitcoin-based BRC-20 tokens and non-fungible tokens such as RATS. These assets were the focus of Gate. The company recently listed a BRC-20 memecoin called SATS and describes itself as a leader in BRC-20 assets.
“With regard to RATS trading and ecosystem, we would like to reassure you that Gate.io has remained committed to providing maximum support to RATS and its community. A Gate spokesperson said that as RATS’ leading trading platform, it contributed 90% of trading volume and currently manages 22% of total assets.
They also pointed to evidence of a preliminary snapshot that appears to have been created by Gate itself for the BRC-20 project traded on the platform, published on December 5. The report proposes reserve rates for ORDI, SATS, RATS and other related tokens. All exceed 100%.
ORDI, another Bitcoin-based BRC-20 token, surged 35% yesterday, likely due to Bitcoin’s own resurgence, hitting $44,000 today.
Gate.io’s trading volume surged on December 5th. Source: BitDegree
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.