Bitcoin Forum

Perhaps some of you might have seen this Reddit discussion about fake volume (https://www.reddit.com/r/CryptoCurrency/comments/brpfdu/only_16_of_the_usdbitcoin_reported_volume_is/)?

The data is extracted from CoinMarketCap. Simply by removing all "stablecoins" and adding up only U$ volumes, you arrive at 1.6% Bitcoin volume traded in actual cash. Everything else is stablecoins.

What do you think about this? Seems like obviously something's wrong here? Why are stablecoins even being called dollars? Makes no sense. This is a time bomb and gonna explode at some point.

Until stablecoins are backed, nothing bad can happen. Tether has been blamed for a few years, but it's still here. Over time more stable coins appear, which makes it possible not to put all eggs in one basket. USD inputs from credits cards are also open, for example, on Binance and some other exchanges, but stablecoins are more convenient as you can't sell your btc back with exchange and get dollars to your credit card (as far as I know, maybe it will be possible soon).

There are certain benefits of using stablecoins and let me explain those benefits without going through the debate of backed up stablecoins. Real USD volumes are less for certain reasons as mentioned below,

1. It requires a bank account and the transfers can be tracked by the regulatory bodies.
2. Most of the crypto traders prefer to remain anonymous
3. Stablecoins are easier to handle than real USD

A majority of the traders don't prefer to go through all these hassles. They just need something which can be calculated according to the value of USD. Stablecoins just filled up that space!

So inclusion of stablecoins is the right way to calculate USD volume because they are just the digital representation of USD. Actual USD handling requires a lot of hassles and your choice of exchange becomes limited!

From what I understand, there is nothing wrong with stablecoin as long as it is properly backed by something and it is usually by the dollar though there are those now experimenting with gold, other fiat currency and yes even T-bills. Stablecoins are very useful in trading and they are there precisely to provide stability hence the name. You ask traders and most likely they are using stablecoins from time to time. Of course, the controversy in Tether got many to question the integrity of the coin and their utility.

The guy made a big "salad", trying something good, having some good ideas, but vastly incomplete. And incomplete means bad in this case.

He removed stablecoins. Great. But he should have counted all the fiat. USD is not the only fiat. There are big volumes on BRL, CNY, CRW, EUR and maybe others too.
Yes, stablecoins are a plague. Unfortunately we have to live with them. Sooner or later the fake (not backed for real) ones will go down.
The numbers look pretty bad. But making them even worse by missing out this and that won't help anybody.

The reddit discussion is like this:
Only 1.6% of the USD/Bitcoin reported volume is actually traded in USD
NOBODY said anything about fake.

Just because I trade LTC vs BTC doesn't mean it's fake.
But, and this is quite funny, although I don't agree with how the conclusion was taken, I agree with the results, probably ~95% is fake activity, bots run by the exchanges themselves to attract customers with fake numbers.


4. A lot of shitty tokens end up being listed only on shitty exchanges that have no USD or another fiat alternative because they want to leave no tracks when they exit scam.
And so users are forced to sell their tokens for stable coins and then turn their stable coin into either BTC or ETH or fiat.

I am not about the ratio but there is a huge fake volume on exchanges. Right now coingecko has a good initiative to prevent that but we will see how effective it will be.

Also, there is this: https://www.bti.live/reports-april2019/

Even big exchanges like huobi and okex using fake volume. I think fake volume is a disease on crypto need to be cured.

volume is an irrelevant metric anyway

having say $50k volume one day but $30k volume the next is MEANINGLESS
it does NOT mean more people are trading.
it does NOT mean more dollar is deposited.
it does NOT mean more people want to buy

volume does not reveal WHO or how much.
for instance with just $5k i can day trade/arbitrage around a market 10 times and make the volume appear as $50k even though the physical $$ moving is just $5k for the entire day.

but i do have to agree, because 'stablecoins' dont have the disadvantage of taking 3-5 business days to move from an american account of exchange A to exchange B. stable coins can be used to arbitrage exchanges in seconds. which makes arbitrages circle faster and thus make volumes numbers appear larger due to more arbitrage cycles.

what would be more of a metric is how much fiat is on orderlines at any one point. then different days you can spot if there are more or less 'buyers' than usual because you can spot how much TOTAL $$ is fixed to an orderline thus able to total how much dollar wants to be buying bitcoin.

the other advantage is that you can spot which direction a market may flow. here is the most easiest way without knowing numbers but just looking at order charts
https://i.imgur.com/1DFRunM.png

but getting back to the topic.. the "volume" metric is meaningless.. it reveals absolutely nothing about the markets that can be of any use in any way

The real problem is not that you need a bank account but the thing that it takes a huge amount of time to open this account in your bank, verify this account and start trading. At the end you will get a huge pain in the ass just to get an access to exchange where you  can lose all your money. And even if you are lucky to earn something then it may take a week to complete your withdrawal.

They are either retarded or involved into some illegal activities.

It is another pain in the ass to move fiat from one exchange to another that is currently solved with stablecoins.

It doesn't matter if it's stablecoins? it's just a way to efficiently and easily trade with fiat-pegged crypto(so, able to send it very fast etc)..

It doesn't make sense to remove all stablecoin volume. If a stablecoin is redeemable for dollars, and people are using it to hedge like dollars, then these volumes are obviously taking away from real dollar volumes.

There's lots of fake volume present, but this is the wrong way to analyze it.

This is not new. With the advent of stablecoins, people are just using those instead of real dollars in trading. Also, exchanges have this habit of faking the volume that goes within their platform to lure more customers and traders in. However I'm not sure whether keeping most of the volumes in stablecoins is a good idea considering that the issue of these currencies being backed by real assets/dollars is still somewhat questionable at best.


One can only hope that they really are backed by something that can really hold value as what Tether introduced them to be.

Well I can't see anything wrong with the trade volume hike as a result of trading against stable coins.. The angle I find scammish is the trade volume on some exchange. Amongst the top 10 exchange by volume,  I doubt 50 percent of them have the trade volume they claim.. This false volume account for bitcoin value and to be this calls for better alternative to coinmarketcap.

This has been an issue for a long time. We can see trading volume as nothing but it could really deceive traders. They're actually doing something to fake their volumes to attract investors which is bad at this point because they're causing confusion.

People don't seem to care anymore unfortunately.

I have seen how people on social media point out that they don't believe that Tether is fully backed, but use it anyway because it offers them the convenience and usability they are looking for.

As long as Tether remains the most liquid and widely used/accepted stablecoin, nothing will change for the better I'm afraid. Its first mover advantage will make sure it stays on top for many more years to come.

Another thing is that exchanges don't have much incentive to promote other stablecoins because of how much volume Tether generates for them, so it's not looking all to good for people hoping to see the situation change.

Their days are numbered. Companies like BTC-e and 1Broker weren't immune from US federal agencies, and Tether isn't either. The DOJ is only six months into a criminal probe of Bitfinex and Tether (https://www.bloomberg.com/news/articles/2018-11-20/bitcoin-rigging-criminal-probe-is-said-to-focus-on-tie-to-tether) for market manipulation. That probe was launched nearly a year after the CFTC began investigating them for the same thing. Sooner or later, both Bitfinex and Tether are probably going to have seizure notices on their domains.


If volume goes to other stablecoin markets on the same exchange, it certainly doesn't hurt them. I noticed that Binance promotes other stablecoin markets like USDC and PAX when you press the "Trade" button on your balances page. I think subtly pushing traders towards safer stablecoins makes sense for exchanges because a Tether implosion will be bad for everyone. The bigger they are when they go down, the worse the collateral damage will be.

Most developers are actually manipulating their coin's volume so that it could look appealing to traders and investors.
It's their way of making people believe that their coin has potential and because of its volume and it causes deception and confusion. Because of fake trading volumes, we are making wrong decisions most of the time so it's something serious that exchanges should do something about.

I expected the volume of stable coins to be higher than the volume of actual USD but this seems like a very disproportionate market to me. Most likely the numbers are this way because pretty much every small-medium exchange use different bots and machines to fake their volume in order to attract more clients because apparently people tend to choose those exchanges that have the highest volume even though over 90% of it its fake

I experience this in an exchange in Japan, when I was trading a particular coin last year, I do experience a sudden pump and a sudden dump, should I set a sell order, another maker will quicker topple my order and mine will go to second or their position, sometimes the sell and buy order margin use to be wide and this sometimes make me spend more time trying to swing trade. It was been manipulated.

I am agree with you, this is a time bomb who is going to explode... This tricky market has tokens as it bases, and this will take us to nowhere, so, be carefull with this bubble and play it smart, because when the crash comes, it will do it hard.

To be fair he did say USD and not "all currencies". As I understood the intended comparison here is between USD and stablecoins, not overall fiat money.

USDT is named after USD after all!

there is something wrong here, and that thing is your title. you are NOT talking about bitcoin trading volume in USD, you are talking about the number that a shitty website called coinmarketcap.com reports and that number is not fake, it is just not what you are looking for.
it is like if you looked at the date and time of this post and think it is the bitcoin price!!!
the number that website reports is the sum of a bunch of irrelevant markets which includes both bitcoin/USD pairs, bitcoin/Tether pairs, bitcoin/other stable coins, and even bitcoin/some altcoins like LTC pairs!

People already addressed it, but exchanges are used more for day trading and small purchases, and stablecoins are more convenient for that purpose.

That doesn't mean cold hard cash isn't flowing into the market though, if that's the concern. OTC exchanges exist, and they apparently have a larger volume than traditional exchanges (https://finance.yahoo.com/news/otc-much-larger-bitcoin-exchange-212305761.html).

The actual problem is the fake volume that needs to be generated by the people who listed these Stablecoins. You have to remember that crypto exchanges needs a minimum amount of volume from coins that are listed on their platform to make it viable and profitable for them to list these coins.

So, if a coin does not meet the minimum volume of transactions, the exchange might have to de-list it to make room for other coins which has the potential to generate more income for them. A lot of the transactions are faked to keep the stable coins listed on the exchanges.  >:(

That's correct, but from what I understood the number, the way he did the research for USD only is completely irrelevant, bringing conclusions that can be misinterpreted and projecting news that look much worse than the reality.

It is because of wash-trading.

There are some exchanges on coinmarketcap, they are saying have more volume than binance but i have never heard of them. I think coinmarketcap is helping wash-traders for not delisting them.

If the stablecoins data is not provided with anything, then of course in the future problems will be and quite serious ones may arise problems. But this will not be due to the fact that dollar volumes are fake, but because companies that have pledged to provide their coins in the ratio of 1 = 1 to the dollar have not done so and are scammers. Like for example USDT. But it is also true that the real dollar is now also not secure. This is a piece of paper, which is accepted by the whole world, but not having a full supply of goods or assets.

Maybe yes, maybe no.
We don't know the truth, and even if that is the truth, as long as we can take the profit from bitcoin trading, then I think we don't have to bother with those things.
In the end, the volume fake will replace with the real volume because it doesn't give an impact to the traders because traders will know if the volume is fake or real.

Well keep in mind that the CMC volume data are not real, here they do not consider the consolidated volume, because there is not the volume of all Exchanges, ejm: of Localbitcoins, of some Koreans Exchanges, and if this is not available in account, obviously the volume is not the real, there is not yet any meter of the consolidated volume, because all the Exchanges of the world must be taken into account, that way if the consolidated volume would be taken into account.

Each Exchange handles its own Volume, and that's why it's usually seen differently, because it has not yet had that capacity to have that consolidated volume link, maybe Strong Hands if they have that data with Blockchain programmers, which, It can be achieved.

With so much fake volume we are sure to have a lot of fake crypto rich too. I think top 100 crypto rich are nobody because they can't show their money in terms of hard cash, just a fake number and volume, how ironic?

Clearly the industry needs to address fake volume by exchanges. We need an independent body to authenticate the volume of exchanges to attract mainstream investors into the space. Already some progress is being made in this respect, but we should also press websites to delist exchanges that fail to meet industry standards.

no we do not need such things. we are in a decentralized system with a semi-decentralized market and it should remain that way and if anything it should be decentralized more instead of going towards more centralization by introducing entities to start policing the market.
as for mainstream adoption, it won't happen because of these things. the adoption process is much more complicated than that.

I've never heard somebody being rich because of volume...wtf is that?
I can make 100 000$ in trade volume rolling 100$ back and forth at the same price, that doesn't make my volume or my 100$ fake.
The problem is when those trades are made by the bots the exchanges run.


Let me count
- independent body to supervise trade
- industry standards
- force businesses to delist businesses

You know you're heading fast and with no lights or breaks towards the current stock market situation.

That's true volume didn't represent the true wealth. It would provide liquidity to the said investment, with so much ICO and IEO running everyday, volume naturally become an indicator to identify good actors from the rest of them. Most poor ICO practically has very low volume, and I'm sure they can't be considered crypto rich, however faking volume is one hell of workload to do, I would like to learn how exchange could fake the volume so effectively, it certainly not easy to trade the crypto 24/7 everyday, they must have a very good algorithm and software to get the job done.

Fake dollar volumes are not a recent problem, for many individuals, it is not a problem at all. It's your point of view, most of the people choose stablecoins because they want to keep their balance anonymous from where Government and banking sectors. If you want to invest in Bitcoin for long term profit then put your money inside Bitcoin but if you are only looking for holding your balance and not informing the government then you can choose stablecoin.

It seems coinmarketcap want to change something about that finally.

https://cointelegraph.com/news/coinmarketcap-to-remove-exchanges-from-calculations-if-they-dont-provide-mandatory-data


I think it was easy for coinmarketcap to stop wash trading, it is great now they decided to do something.

For sure, mostly Bitcoin is not used for trading. It's used for buying and selling some goods from the darknet. There is not a lot of professional traders.

This is great news. The whole fake volume drama has been running for quite a while in recent times and smaller trackers already did something about this, but it is good to see CMC finally use their brains and do something appropriate regarding this matter.

People will understand which exchanges are legit in this manner thanks to a popular site like CMC and the scam exchanges will basically lose everything and disappear. More positive news.

I'm not a fan of stablecoins, but they do offer a convenient way of trading. You simply don't need to deal with the wait times with deposits and withdrawals, nor are there as much fees involved with conversion and generally makes a much more liquid market.

I wouldn't discount bitcoin trading volume the way you did and call the volume of all pairs with stablecoins "fake".

After all, the reserve requirements of these coins are completely out of the scope of what the bitcoin network can control. If people choose to transact with them, so be it, at their own risk, but it should still count as "legitimate volume". What is illegitimate volume is those that are generated by wash trading, which is much more difficult to estimate.

The issue of stablecoins not being backed by anything yet traded on exchanges is worrisome due largely to the fact an exit scam can take effect any day leading lots of persons to lose their funds. If other exchanges can have USD pair like what Bittrex has it will be a better option knowing your money is safe.

Actually this is not a problem, stablecoin does aim to have a stable value equivalent to a particular currency, so there will be many people who only aim to save their money but not in digital money in the form of a stable coin crypto, this is what making more traders choose stable coins to secure the fiat money they have without having to risk being affected by extreme price corrections such as other crypto currencies.

I would not be surprised it is so low for the trading volume. :-\
Bitcoins trading volume outperformed gold and obviously usd trading volume for the year sometime last month. :)

then they are exposing themselves to unbelievably huge risks without even knowing it!
all these so called "stable coins" are centralized and most of them are already run by shady companies that have not been able to prove they have the funds to actually back their token up in case everyone wanted to cash out to fiat.
not to mention that this is clear definition of printing money and since they are centralized government may not look kindly at them.