95% of the reported volume is fake but LOTS of good news!

[hugeblack]

I have read this analysis by @BitwiseInvest for 81 exchanges reporting "more than 1M in BTC volume on CMC"  The results were as follows:

About 95% of the reported BTC spot volume is fake as the daily spot volume is ~$270M from 10 regulated exchanges[1] that have special laws on manipulation.

But how do you know the real/fake BTC spot volume? Two tests were used:

 - First: Real exchanges contain more trades in small amounts compared to large amounts. The chart below explains more:

 - Second: Real exchanges contain volume spikes that align perfectly:

By removing fake volume, the real BTC volume is entirely in line with gold.

Gold’s market cap is ~$7T with a spot volume of ~$37B implying a 0.53% daily turnover.

Bitcoin’s $70B market cap would imply a 0.39% daily turnover, very much in-line with that of gold.

Read more about the subject, some analysis, news, and source -----> https://threadreaderapp.com/thread/1109114656944209921.html

[1]  @binance, @bitfinex, @krakenfx, @Bitstamp, @coinbase, @bitFlyerUSA, @Gemini, @itBit, @BittrexExchange, @Poloniex / @circlepay

[talkbitcoin]

https://threadreaderapp.com/thread/1109114656944209921.html

that is a bullshit title. it is like looking at coinmarketcap and then saying cryptocurrencies (which would also include bitcoin) are 95% scams because that is what you see when you look at the whole market.

in this case it is obvious that when you look at shitty exchanges (for example Yobit) their volume is mostly fake because that is how they stay alive. and more importantly it is pointless to even include and analyze that data!

a valuable article would have been one that focused on real exchanges that matter (Coinbase, Bitstamp, Kraken,...) and then in the title mentioned how much of that volume is fake.

besides just by looking at the "histogram" of volume, the "spikes",... and lack of resemblance to other exchanges doesn't mean it is fake! it just means you are looking at a different market which has different type of customers.

[sheenshane]

Well, I have actually expected binance and bitfinex to be listed on the most trusted trading platform that tells the truth. It is very easy to spot the fakes and the real schemes if you will analyze properly. However, the title is somehow doubtful. The article should have focused on the trusted schemes instead of saying that 95% in the market are scams.

[buwaytress]

Kind of similar lack of sound methodology in this earlier report supposedly warning of "87 percent" of fake exchange volume. Can't really be bothered to see if it's actually the same sources, tired eyes I can blame.

You'd be really surprised if you were to apply some of the same methods in a traditional market. Say the stock exchange, especially in developing economies. Got to define what's real and what's fake properly. A lot of fake is considered real, really.

[justspare]

By removing fake volume, the real BTC volume is entirely in line with gold.

Gold’s market cap is ~$7T with a spot volume of ~$37B implying a 0.53% daily turnover.

Bitcoin’s $70B market cap would imply a 0.39% daily turnover, very much in-line with that of gold.

Honestly, I would prefer to compare bitcoin with "money" not investment methods such as gold. People from the first day bitcoin was created debated if bitcoin is something more similar to gold (as in if its investment method to buy and sell but have value in itself) or closer to dollar (which you can use to buy stuff with) and I always stated bitcoin is closer to dollar not gold.

After all look at all the online places that accept bitcoin as payment, they are literally just accepting bitcoin, they also accept dollar as well, but do they accept gold as a payment ? So, this shows how as an investment bitcoin is in line with gold but I would prefer to see it as in line with dollar not gold because moving closer to gold in terms of usage makes bitcoin not money but just another ETF.

[BitHodler]

You'd be really surprised if you were to apply some of the same methods in a traditional market. Say the stock exchange, especially in developing economies. Got to define what's real and what's fake properly. A lot of fake is considered real, really.

As long as it aren't the exchanges faking their volumes, but entities that pay fees for their trades, then it's not fake in my opinion. The same happens in the stock market where institutions buy and sell into their own orders.

The main problem is when the exchanges do it themselves, which means that the volumes generated are totally worthless. They may even manually 'print' coins just for the sake of wash trading.

The way volume manipulation is so popular within crypto is that it makes them look crowded, which attracts people and allows them to charge high listing fees for coins and tokens. It's sad that it happens, but not completely shocking.

[BrewMaster]

this is another new trend that is starting in bitcoin world where people find some topic, latch on and never let it go. a couple of weeks ago it was bitcoin's proof of work and how it should be replaced, before that it was the energy consumption, before it was whale manipulation and bubbles, and before that it was scalabity and before that it was high fees, before that it was China and control over mining power, before that it was China and controlling price,... that is basically the summary of the past 4 years.

in the end there is always something these bored people talk about, they have some points too, for example we know exchanges fake their volume but these pointless articles are all exaggerating that small point to the point where it becomes meaningless.

95%? lol come out and say the whole market is fake, why bother with that little 5% it is as if only 3 person are trading bitcoin and the rest is fake.

[exstasie]

95%? lol come out and say the whole market is fake, why bother with that little 5% it is as if only 3 person are trading bitcoin and the rest is fake.

The problem is all these new exchanges that popped up over the past year or two. So many crappy illiquid exchanges or derivative brokers that are faking volume to attract traders. This makes the legitimate exchanges appear fewer and fewer, lost in a sea of fakers.

It reminds me of the idea of Bitcoin dominance. Worthless tokens are churned out by the thousands but their market caps are propped up by high value trades on nonexistent volume. That makes it look like Bitcoin is losing dominance when actually the data is just misleading and fake.

[1Referee]

It's all subjective, so take it with a grain of salt. It's impossible to exactly measure the percentage of fake volumes.

What surprises me is that most of the more recent exchanges aren't doing any effort to obfuscate their fake volumes by having it look more organic. Some of these exchanges are being operated by well known public faces within the world of crypto, and some even operated well known fake volume exchanges before. In other words, they should know how important it is to present volumes that look as organic as possible.

CME is by far the largest actual dollar settled exchange in the space, so it makes sense to pay more attention to what happens over there.

[Febo]

What surprises me is that most of the more recent exchanges aren't doing any effort to obfuscate their fake volumes by having it look more organic.

Why would they do it? They love fake volume. 1. It give more value to coins they got fro free while they listed that shitcoin. 2. It give them new traders when they see. Oh this is legitimate exchange since people are trading there.

[o_e_l_e_o]

-snip-

This is it exactly, and the comparison is spot on.

Trash coins are created and fake traded between the creator and his friend to create absurd marketcaps to attract newbies who don't know any better in an attempt to scam them. Trash exchanges are created and fake trades are used to create absurd volumes to attract newbies who don't know any better in an attempt to scam them. The advice in both cases are the same - stay away from unheard of and unknown coins/exchanges, and stick to the ones everyone knows and trusts. Stop risking everything on the promise of some get rich quick scam.

[n0ne]

What surprises me is that most of the more recent exchanges aren't doing any effort to obfuscate their fake volumes by having it look more organic.

Why would they do it? They love fake volume. 1. It give more value to coins they got fro free while they listed that shitcoin. 2. It give them new traders when they see. Oh this is legitimate exchange since people are trading there.

Mentioned in the quote is the fact, to eliminate the fake volume issues quite often inspections need to be done on the exchanges. Mining and exchanges are two important factors that help with the growth of cryptocurrency, when something is manipulated it affects the user community. This too is also one of the reason for the rejection from SEC.