[2013-03-23] 95% of Reported Bitcoin Trading Volume Is 'Fake'

[stmar]

95% of Reported Bitcoin Trading Volume Is 'Fake'

• Bitwise Asset Management reports that CoinMarketCap (CMC) has been greatly exaggerating average bitcoin trading volumes.

• CMC has been reporting BTC trading volumes of around $6 billion - whereas it's actually around $270 million according to Bitwise's research.

A recent study conducted by Bitwise Asset Management has revealed that as much as 95% of spot bitcoin (BTC) trading volume has been “faked” - as it’s being inaccurately reported by loosely regulated or completely unregulated cryptocurrency exchanges.

Founded in 2017, Bitwise Asset Management is a privately-held, San Francisco-based crypto research firm that also serves as a “trusted partner to individuals, wealth managers, family offices, investment managers and institutions” in making business-related decisions in the digital asset industry.

In its extensive report, the research team at Bitwise analyzed the world’s top 81 crypto exchanges, in terms of trading volume, and found that financial data reported by CoinMarketCap (CMC), a leading crypto data provider, had been artificially inflated. Researchers at Bitwise claim that CMC had reported a combined $6 billion in average daily trading volume. However, the results of a study commissioned by it revealed that only $273 million of CMC’s reported BTC trading volume was “legitimate.”

<.....>

Read:
https://www.cryptoglobe.com/latest/2019/03/95-of-bitcoin-trading-volume-reported-on-coinmarketcap-is-fake-bitwise-report/

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[mrdeposit]

95% of Reported Bitcoin Trading Volume Is 'Fake'

• Bitwise Asset Management reports that CoinMarketCap (CMC) has been greatly exaggerating average bitcoin trading volumes.

• CMC has been reporting BTC trading volumes of around $6 billion - whereas it's actually around $270 million according to Bitwise's research.

A recent study conducted by Bitwise Asset Management has revealed that as much as 95% of spot bitcoin (BTC) trading volume has been “faked” - as it’s being inaccurately reported by loosely regulated or completely unregulated cryptocurrency exchanges.

Founded in 2017, Bitwise Asset Management is a privately-held, San Francisco-based crypto research firm that also serves as a “trusted partner to individuals, wealth managers, family offices, investment managers and institutions” in making business-related decisions in the digital asset industry.

In its extensive report, the research team at Bitwise analyzed the world’s top 81 crypto exchanges, in terms of trading volume, and found that financial data reported by CoinMarketCap (CMC), a leading crypto data provider, had been artificially inflated. Researchers at Bitwise claim that CMC had reported a combined $6 billion in average daily trading volume. However, the results of a study commissioned by it revealed that only $273 million of CMC’s reported BTC trading volume was “legitimate.”

<.....>

Read:
https://www.cryptoglobe.com/latest/2019/03/95-of-bitcoin-trading-volume-reported-on-coinmarketcap-is-fake-bitwise-report/

Interesting article but some questions come to my mind while reading it. First of all, why CMC need to show crypto trading volume so high or inflated? The increased fake volume will not bring any additional advantage to their site but these fake numbers can be used for manipulation purposes from my point of view.

[1Referee]

Interesting article but some questions come to my mind while reading it. First of all, why CMC need to show crypto trading volume so high or inflated? The increased fake volume will not bring any additional advantage to their site but these fake numbers can be used for manipulation purposes from my point of view.

It's CMC's job to show whatever data the API of an exchange pumps through. What they do on a less frequent basis is exclude some exchanges if they are too obviously manipulating things, but we can't really expect them to combat each and every exchange because it would obviously affect their income significantly.

What people need to understand is that CMC is free to use, so if you think they aren't doing a good job providing accurate/honest data, then simply skip them.

[gentlemand]

Interesting article but some questions come to my mind while reading it. First of all, why CMC need to show crypto trading volume so high or inflated? The increased fake volume will not bring any additional advantage to their site but these fake numbers can be used for manipulation purposes from my point of view.

Odd that two of these studies have arrived in quick succession. Running CMC must be a pain up the arse. They're so influential at present that they're constantly going to be gamed from every possible angle to gain advantage. Or they're colluding and don't give a shit.

[pixie85]

We all know exchanges are faking volume. The chinese were caught doing it in 2014. If CMC is taking data straight from exchanges it is destined to be fooled.
I think that 95% is also an exaggerated number. How can they know that the real volume is 270 million is the exchanges are reporting it. They would have to prove that they are lying first instead of blaming CMC for their reports.

Coinbase + bitstamp have 25 million volume together and bitmex is reporting 600 million.

[gentlemand]

We all know exchanges are faking volume. The chinese were caught doing it in 2014. If CMC is taking data straight from exchanges it is destined to be fooled.
I think that 95% is also an exaggerated number. How can they know that the real volume is 270 million is the exchanges are reporting it. They would have to prove that they are lying first instead of blaming CMC for their reports.

Coinbase + bitstamp have 25 million volume together and bitmex is reporting 600 million.

Though they show Bitmex they don't actually count it as volume. Bitcoins are not being traded, just contracts. Considering how degenerate most traders are and how much they love being boned up the ring piece I can well believe Bitmex's figures are one of the accurate ones.

[joniboini]

IIRC the end of the report suggest that ETF is needed to avoid such fake volumes as the trend. That's a nice twist. Somehow it suggest that more regulations are required to make sure crypto business is free from manipulation. A nice opinion for those who believe in ETF.

[Betwrong]

I don't know if they are telling the truth or not, but indeed it's hard to believe that BTC daily trading volume sometimes is close to (or even greater than) the total amount of circulating supply. Let's look at the stock market for comparison. The monthly trading volume of stocks according to this article is around 10% of the total value of all stocks available to trade. Now if we calculate the monthly trading volume of all cryptos

$29 billion x 30 =  $870 billion

and take into account that the total market cap is $140 billion, we are going to have

870 : 140 = 6.21

which means that the monthly trading volume of all cryptos is around 621% of the total value of all cryptos.

But I'm not sure about that. It's possible that crypto currencies have been traded more aggressively than stocks, and then the volumes on CMC are more or less correct.

[gentlemand]

It's possible that crypto currencies have been traded more aggressively than stocks, and then the volumes on CMC are more or less correct.

A few seconds of browsing and nosing around would put that idea to bed forever. It's pointless to refute these reports when the evidence is sat in front of us and pretty much totally shameless about it too. The only question is percentages but that's academic. It's a high one regardless.

[bbc.reporter]

What if most of the cryptocoin exchanges with fake volumes are a part of a global money laundering network service for billionaires who have something to hide?

[Kakmakr]

IIRC the end of the report suggest that ETF is needed to avoid such fake volumes as the trend. That's a nice twist. Somehow it suggest that more regulations are required to make sure crypto business is free from manipulation. A nice opinion for those who believe in ETF.

An ETF will only calculate the larger institutional capital investments that are done on a daily basis and will not include the millions of smaller transactions that are done by individual on 1000s of exchanges all over the world. Also remember that CMC are only using transaction data from the larger exchanges out there and most of the transactions on the smaller exchanges are not even counted.  

Also look at the motives for Bitwise to do this research, to find the hidden agenda for this revelation.   <Self promotion>

[BitHodler]

But I'm not sure about that. It's possible that crypto currencies have been traded more aggressively than stocks, and then the volumes on CMC are more or less correct.

Nah. It wouldn't surprise me if the volumes of most altcoins are for 98% fake. Exchanges are incentivized to continue pumping up their volumes because their competitors do that as well.

If one exchange reports $10 million in volume, the other will push it to $12 million, then another one does $15 million, and this continues till these manipulative exchanges implode (which I do hope to see happen sooner rather than later).

The amount of garbage we have to go through here is mind boggling. Instead of seeing markets mature, we're going backwards where people don't even seem to care about it anymore....

[nutildah]

Bitwise is indeed wise, because they are using this report to prop up the case for approval of their own Bitcoin ETF, which will take spot prices from the exchanges deemed non-manipulative to calculate their ETF price.

https://www.coindesk.com/bitcoin-futures-volume-is-more-significant-than-you-think-bitwise-says

From what I read in the SEC denial of the Gemini Trust ETF, this may not be enough to guarantee approval, though, as it sounds like they wanted some sort of fraud monitoring agreements with other SEC-approved exchanges, and I'm not sure there are any...

Edit: there's at least a couple of SEC-approved exchanges, Gemini and CBOE

[elda34b]

From what I read in the SEC denial of the Gemini Trust ETF, this may not be enough to guarantee approval, though, as it sounds like they wanted some sort of fraud monitoring agreements with other SEC-approved exchanges, and I'm not sure there are any...

If we need centralised party to manage this kind of problem, I think it's a bit ironic. We should've another alternative such as decentralised exchange, but the problem is lack of volume. Unless centralised exchanges got taken down by government, I think DEX with high-volume and low spread is not possible (DEX as in cross-chain DEX).

Well, anyway I hope those people who 'manipulate' the market can get punished if they are really guilty.

[gentlemand]

Edit: there's at least a couple of SEC-approved exchanges, Gemini and CBOE

In what way are they SEC approved? Gemini have had plenty of dealings with them but that's about it.

One of the more interesting tales out there is Poloniex's acquisition by Circle. That had SEC fingerprints all over it.

https://u.today/leaked-sec-agreed-not-to-pursue-enforcement-action-against-poloniex-if-acquired-by-circle

Another aspect of reports like this is that is suddenly makes tales like the Gox liquidations and Calvin Ayre shitting the price seem a lot more plausible. If the 'real' market is a lot thinner than it looks on the surface then one loaded up entity definitely can bat the price around.

[nutildah]

Edit: there's at least a couple of SEC-approved exchanges, Gemini and CBOE

In what way are they SEC approved? Gemini have had plenty of dealings with them but that's about it.

OK I have to edit my edit.

Gemini was only approved by the New York Department of Financial Services.

https://gemini.com/about/

CBOE is SEC approved.

https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html

[Naida_BR]

That doesn't surprise me at all.
In this period where the bear market insists, projects try to "manipulate" the community by promoting their project in a fake way. Fake volumes, paid shilling etc. it is all around the bitcointalk forum.

It is very sad to see that, and this is another reason that I do not invest anymore.
They will realize that they do more harm than good in the end.

[Betwrong]

That doesn't surprise me at all.
In this period where the bear market insists, projects try to "manipulate" the community by promoting their project in a fake way. Fake volumes, paid shilling etc. it is all around the bitcointalk forum.

It is very sad to see that, and this is another reason that I do not invest anymore.
They will realize that they do more harm than good in the end.

The thing is that people normally don't care about the overall situation. What they do care is the supposed potential success of their own project, and they think they can trample over the heads of others on this way. Perhaps we should remind ourselves more frequently that we are in the same boat, so to speak. Not only we should restrain ourselves from rocking the boat, but sometimes we should help if there are problems on the other end.

[Bitcoin_Arena]

Not sure about the 95% bit but Fake trade volumes are a big reality.
I have seen it with my very own eyes especially with small exchanges that try to pump the daily trade volumes using bots so that they can rank high enough in the coinmarketcap charts.
Diginifex is one of such exchanges 
You will never see an order on the orderbook getting completed but when you look at the trade history, it shows trades are being executed every second and the funny bit is the quantity of coins bout or sold is in the same figure range.
When the bot stops, trading stops, the trade history stops too until the bot resumes again after some hours

[figmentofmyass]

Another aspect of reports like this is that is suddenly makes tales like the Gox liquidations and Calvin Ayre shitting the price seem a lot more plausible. If the 'real' market is a lot thinner than it looks on the surface then one loaded up entity definitely can bat the price around.

it's a thin market, always has been.

but i don't think events like that dictate price trends per se. if demand were strong, it could absorb those dumps and recover. think of the silk road dump in 2013 for example. the market bucked the crash in a day and erupted into a bubble shortly after.

weak demand points to bear market conditions, and that's a crucial ingredient for things like this to matter.

[bbc.reporter]

But I'm not sure about that. It's possible that crypto currencies have been traded more aggressively than stocks, and then the volumes on CMC are more or less correct.

Nah. It wouldn't surprise me if the volumes of most altcoins are for 98% fake. Exchanges are incentivized to continue pumping up their volumes because their competitors do that as well.

If one exchange reports $10 million in volume, the other will push it to $12 million, then another one does $15 million, and this continues till these manipulative exchanges implode (which I do hope to see happen sooner rather than later).

The amount of garbage we have to go through here is mind boggling. Instead of seeing markets mature, we're going backwards where people don't even seem to care about it anymore....

How do cryptocoin exchanges with fake volume earn money if they are only wash trading with themselves? Also, why are they doing this?

[gentlemand]

How do cryptocoin exchanges with fake volume earn money if they are only wash trading with themselves? Also, why are they doing this?

By faking it till you make it?

I've seen quite a few threads on here from newcomers who can't understand why that super amazing exchange that has trillions of users is literally unusable and every single order they attempt never goes through.

They can also point to their 'volume' and charge new projects a large listing fee because of that amazing userbase. The shitcoiners who pay it probably know they're paying for nothing other than bilge but again that 'volume' is going to draw in pinhead investors. It's nothingness built on nothingness but enough real dollars are milked from saps.

[bbc.reporter]

@gentlemand. Would you also reckon that it is also possible that many of those exchanges with fake volumes are a part of a global money laundering ring?

[earnfreecoins]

How do cryptocoin exchanges with fake volume earn money if they are only wash trading with themselves? Also, why are they doing this?

By faking it till you make it?

I've seen quite a few threads on here from newcomers who can't understand why that super amazing exchange that has trillions of users is literally unusable and every single order they attempt never goes through.

They can also point to their 'volume' and charge new projects a large listing fee because of that amazing userbase. The shitcoiners who pay it probably know they're paying for nothing other than bilge but again that 'volume' is going to draw in pinhead investors. It's nothingness built on nothingness but enough real dollars are milked from saps.

What you are telling is for the reason to show the users that this site is having big volumes so that user should invest in their site and trade, so that when they get enough users to scam they will come out with hacking or some other excuses and scam the users. So always take caution when trading with fake volume trading exchanges.

[glowing10]

@gentlemand. Would you also reckon that it is also possible that many of those exchanges with fake volumes are a part of a global money laundering ring?

Just in case if this things happen then their will be a major blow to the crypto currency because government will taker a corrective steps and also put a ban if they are legal in their country and finds out that it is being misused to a greater extent which could act as a blow on the crypto currency.

[gentlemand]

@gentlemand. Would you also reckon that it is also possible that many of those exchanges with fake volumes are a part of a global money laundering ring?

I don't reckon that myself. There are a million and one less obvious and lower profile ways to go about it than dicking around with crypto, let alone run an exchange. Memories are long and blockchains remember forever.

[BitHodler]

Would you also reckon that it is also possible that many of those exchanges with fake volumes are a part of a global money laundering ring?

It could very well be yeah. Most of the exchanges in crypto are unregulated, and plan to stay unregulated. If your goal was to gain ground as legitimate and compliant exchange, which Coinbase is, you are completely open and willing to go for it.

Some exchanges do ask for KYC verification, but that's just an attempt to shake off unwanted attention from authorities. We don't know what's going on behind the scenes and they still are an unregulated entity.

Binance mildly started to ask for more personal information, but there is a reason they don't want to become regulated, and money laundering might be part of that, or maybe they just want to continue making insane amounts of money as they are doing now.

I might be totally wrong on the money laundering aspect, but I somehow feel there is something shady going on with Binance.

[malikusama]

95% of Reported Bitcoin Trading Volume Is 'Fake'

• Bitwise Asset Management reports that CoinMarketCap (CMC) has been greatly exaggerating average bitcoin trading volumes.

• CMC has been reporting BTC trading volumes of around $6 billion - whereas it's actually around $270 million according to Bitwise's research.

A recent study conducted by Bitwise Asset Management has revealed that as much as 95% of spot bitcoin (BTC) trading volume has been “faked” - as it’s being inaccurately reported by loosely regulated or completely unregulated cryptocurrency exchanges.

Founded in 2017, Bitwise Asset Management is a privately-held, San Francisco-based crypto research firm that also serves as a “trusted partner to individuals, wealth managers, family offices, investment managers and institutions” in making business-related decisions in the digital asset industry.

In its extensive report, the research team at Bitwise analyzed the world’s top 81 crypto exchanges, in terms of trading volume, and found that financial data reported by CoinMarketCap (CMC), a leading crypto data provider, had been artificially inflated. Researchers at Bitwise claim that CMC had reported a combined $6 billion in average daily trading volume. However, the results of a study commissioned by it revealed that only $273 million of CMC’s reported BTC trading volume was “legitimate.”

<.....>

Read:
https://www.cryptoglobe.com/latest/2019/03/95-of-bitcoin-trading-volume-reported-on-coinmarketcap-is-fake-bitwise-report/

Interesting article but some questions come to my mind while reading it. First of all, why CMC need to show crypto trading volume so high or inflated? The increased fake volume will not bring any additional advantage to their site but these fake numbers can be used for manipulation purposes from my point of view.

CMC can easily be manipulated by the exchanges, it can't detect or remove the fake volume because it can only show exact amount according to the data which is provided by the exchanges.
So exchanges (which are creating fake volume) are responsible for it not CMC.
Many exchanges like Coinbene, OKEx and OEX are one of them and currently leading the list of "top exchanges with fake volume".

[bbc.reporter]

Would you also reckon that it is also possible that many of those exchanges with fake volumes are a part of a global money laundering ring?

It could very well be yeah. Most of the exchanges in crypto are unregulated, and plan to stay unregulated. If your goal was to gain ground as legitimate and compliant exchange, which Coinbase is, you are completely open and willing to go for it.

Some exchanges do ask for KYC verification, but that's just an attempt to shake off unwanted attention from authorities. We don't know what's going on behind the scenes and they still are an unregulated entity.

Binance mildly started to ask for more personal information, but there is a reason they don't want to become regulated, and money laundering might be part of that, or maybe they just want to continue making insane amounts of money as they are doing now.

I might be totally wrong on the money laundering aspect, but I somehow feel there is something shady going on with Binance.

I reckon that a sign that exchanges are being used for money laundering are exchanges that have a lower than average price of bitcoin trading in them similar to BTCe. This might be because they are bitcoin to fiat exit points.

[stmar]

Bloomberg:
Crypto Aggregator Says Concerns Over Inaccurate Data Are Valid

[gentlemand]

Bloomberg:

The main thing I took away from that is that CMC is one of the world's top 500 most visited sites which I didn't know and find pretty incredible. That puts into perspective just how much power they've wound up with.

https://www.alexa.com/siteinfo/coinmarketcap.com