Forbes says Half of Bitcoin trading volume is fake

[LeGaulois]

According to a study, cryptocurrency exchange platforms are pushing unreliable numbers. The analysis of 157 crypto exchanges finds that 51% of the daily bitcoin trading volume being reported is likely bogus.

Small clue with which we are familiar in the crypto, the wash trading (for those who do not know what it is: Wash trade). Nothing new, it happens on large platforms like Binance, Huobi, and many others that falsely signal their liquidity to push up the numbers. Especially with the exchanges not regulated.

But hey! The same is done IRL with the manipulation of the markets. It can't even be denied since that's why some have procedures, like the STPF. so...
I'm not even sure it's something considered illegal in all countries.

Something to consider, there is no universal method to define volumes accurately. Even companies like Coingecko or Coimartcap only use estimates (both true and false). That means that it is to be taken with a grain of salt. However, the math does not lie and statistics can be useful


The main findings:

More than half of all reported trading volume is likely to be fake or non-economic. Forbes estimates the global daily bitcoin volume for the industry was $128 billion on June 14. That is 51% less than the $262 billion one would get by taking the sum of self-reported volume from multiple sources.

Tether, the world’s largest stablecoin, continues to be a dominant player in the crypto trading economy, especially when it comes to trades against bitcoin. Its current market capitalization is $68 billion, despite questions about its reserves.

In terms of how much bitcoin activity takes place at these firms, 21 crypto exchanges generate $1 billion or more in daily trading activity, while the next 33 exchanges had volume between $200 million and $999 million across all contract types, spot, futures and perpetuals. Perpetual futures, or perpetual swaps as they are also known, are futures contracts that don’t require investors to roll over their positions. Binance is the clear leader, with a 27% market share, followed by FTX. Looking only at spot bitcoin, the top position is shared by Binance, FTX, and OKX. Chicago-based CME Group is the market leader in bitcoin futures trading.

The biggest problem areas regarding fake volume are firms that tout big volume but operate with little or no regulatory oversight that would make their figures more credible, notably Binance, MEXC Global and Bybit. Altogether, the lesser regulated exchanges in our study account for approximately $89 billion of the true volume (they claim $217 billion).

The creation of new trading assets and products such as stablecoins and perpetual futures adds complications for national authorities seeking to regulate crypto markets. Major U.S. exchanges hardly utilize these instruments or contracts in any of their trading. However, offshore exchanges make significant use of them as ways to synthetically create U.S. dollar liquidity on their platforms (they cannot get U.S. bank accounts).

In the Western world and particularly in the U.S., it is tempting to think of bitcoin only trading against either the U.S. dollar or the euro and British pound. But some of the largest trading pair activity occurs against fiat currencies like the Japanese yen and Korean won and against major stablecoins like Binance U.S. dollar and the USD coin.

 573 million people visit crypto exchange websites on a monthly basis

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[LegendaryK]

More like 80% of btc trading volume is fake.
Half was being too generous. 

[AjithBtc]

This is true and similar incidents have happened in the past. Even in my country the exchange WazirX was investigated by Enforcement Directorate and they had got difference in the trading volume and the real volume. This is just to keep them on the top. Not the low volume exchanges, each and every exchange gets involved into it. One of the prime reason for the same is the use of money laundering and the another thing is there is no regulated authority to audit these centralized exchanges at regular time intervals.

[ChiBitCTy]

This really wouldn’t surprise me nor do I have a hard time believing it. Now I think the 51% “finding” is a bit unfounded, and don’t believe that to be a true accurate number of how much of the trading volume is fake, but I could see a portion of that, maybe a quarter, for coins like bitcoin. Not for most all shitcoins, I could see that number being accurate. They are mostly nonsense pseudo scams anyhow.

[TimeTeller]

This really wouldn’t surprise me nor do I have a hard time believing it. Now I think the 51% “finding” is a bit unfounded, and don’t believe that to be a true accurate number of how much of the trading volume is fake, but I could see a portion of that, maybe a quarter, for coins like bitcoin. Not for most all shitcoins, I could see that number being accurate. They are mostly nonsense pseudo scams anyhow.

We all know that in most alts, wash trading is indeed happening.
Especially those small projects where the dev team can manipulate the trading to make their trading volume big.
It is known also even in some exchanges where wash trading is rampant.
So I can say, a lot of the trading volume in most alts are fake.
But when it comes to btc, maybe small, just for the exchange to show they have trading volume in btc.

[hatshepsut93]

I can't judge how accurate this report is, but such public perceptions is quite damaging to Bitcoin's long-term adoption. Governments and investors with more conservative approach are not trusting Bitcoin, so it's hard for Bitcoin to become a truly mainstream asset, instead of being controversial.

[DapanasFruit]

I guess this is one big reality that we are facing in the world of cryptocurrency trading and it is because this remains to be largely unregulated industry and players from different parts of the globe are not following a standard set of rules for guidance and implementation. Therefore, am not seeing any major solution to this fake figures in the foreseeable future...especially since some figures are just based on self-reporting mechanism. Now, am just wondering what are the negative things that fake volume can lead to?

[Darker45]

Although the number is quite high, it could indeed be true. This has been a rampant issue among exchanges, especially among those that are unheard of and among coins and tokens that are unpopular. But this has been an issue for several years. There's nothing surprising about this. Even when I was new in the market, the issue of fake volumes and fake trades is already present. Imagine unknown exchanges claiming billions in their 24-hour volume. And if we actually look at the orders in exchanges, it is more or less obvious how bots are actually trying to fake trades.

[GreatArkansas]

It's still difficult to identify or to know the exact numbers who much the fake volume currently on the market because of these centralized exchanges.
There are some exchanges that are not transparent, that's why I can say it's difficult, there are also some exchanges that are manipulating it so numbers regarding centralized exchanges like volumes must not need to be fully trusted.

[TravelMug]

Not the first time that we heard this news though, I remember there was a website that track all or almost all the data and tell us who's who in terms of wash trading, unfortunately I can't find it anymore. It was like in 2018 or 2019.

Anyhow, even if we've seen this before, bitcoin is still going strong, last year we have all time high and then the usual bear market. So I would say that it doesn't have any effect at all. Maybe some will find it negative, but as I have said, like every month there could be someone mentioning in the public about wash trading but it was just ignored.

[amishmanish]

Every market goes through ups and downs and Bitcoin is no exception. However despite of all the rollercoaster ride Bitcoin has actually emerged stronger over time. This time too Bitcoin will emerge stronger and we all need to actually see that every month one or other big corporations or government is adopting Bitcoin. With the kind of expansion we are seeing Bitcoin is only going to go up.

[Lucius]

A lot of things are fake in the world of cryptocurrencies, and we have known that CEX fakes trading volume since the time when the Chinese did it, from whom everyone else obviously learned the job very well. Given that all of them (CEX) are struggling to prove themselves as successful as possible and to attract as many new clients as possible, it seems to me that this kind of business practice will continue.

I can't judge how accurate this report is, but such public perceptions is quite damaging to Bitcoin's long-term adoption. Governments and investors with more conservative approach are not trusting Bitcoin, so it's hard for Bitcoin to become a truly mainstream asset, instead of being controversial.

In that case, we could then talk about trust in companies (CEX), and not in Bitcoin, which cannot be held responsible because someone manipulates trading data. If that's an excuse for them not to believe, then it's a really stupid excuse. Apart from that, I don't really care what governments and some rich investors think, because for most of them Bitcoin will always be a problem.

[kryptqnick]

I've seen similar estimates a few years ago, I believe, so it's not anything new that's going on, right? When it comes to total trading volume, there've been reports claiming much worse figures than the current 51%. In 2019, there was an article about 95% of the volume being fake, and about 70% of volume on Coinmarketcap being fake. As for Bitcoin trading volume, 50% was claimed to be wash trading. So these stories have been going on for years, and I guess they are even likely to be true. But there's clearly enough volume on big exchanges for big purchases and sales, so I don't think we should be too concerned.

[stompix]

51% of the volume is fake, for the rest of it we don't have yet proof it's fake!

We all know a lot of the volume is fake, we have exchanges that have halted withdrawals and deposits and are still sending to indexers millions in claimed trade volume, millions as in hundred of millions. The same happens when some exchange gets hacked and we see that despite them making the same millions in volume each day they only had like 1000 BTC in their wallet and they can't even cover that and are going bankrupt.

The only way to get the real volume would be to get all the financial fillings from those exchanges and see the true numbers behind it since it's really hard to claim you're doing a billion a month in volume but your revenue is content in pennies.
I love those moments when somebody comes and asks about an exchange, nobody on the entire forum uses it or knows something about it but when you look at coingecko or cmc you see billions a month in trades, like seriously, how?

As with ownership numbers, I wonder when global usage will indeed increase to some serious levels, what will they claim, trillions per second?

[hatshepsut93]

In that case, we could then talk about trust in companies (CEX), and not in Bitcoin, which cannot be held responsible because someone manipulates trading data. If that's an excuse for them not to believe, then it's a really stupid excuse. Apart from that, I don't really care what governments and some rich investors think, because for most of them Bitcoin will always be a problem.

Centralized exchanges are a part of Bitcoin ecosystem, and when people say "Bitcoin" they often mean the whole ecosystem. It's okay to not care what governments and other big players think. But for those who are interested in Bitcoin's price performance and wide adoption, those things are important.

[DaveF]

The other question is, does anyone care?
Seriously, the big money people traders don't even look at the obviously fake exchanges, the big corporate players are all doing it with the Coinbases of the world.
The little joke places with the obviously fake volume on CMC or Gecko don't really do anything in the real world so they can post any numbers they want.
If the BTC <-> fiat or whatever numbers don't move you can put up anything you want, it's just a pretty picture. It does not matter.

-Dave

[Pierre 2]

I think everyone in forum knows this is definitely, 100 per cent true. Although I also think it does not matter at all. Year is 2022 and not only cryptomarkets, every market has fake volume. Markets became best place to generate money very quickly. There are many options, like bots as example, became very popular and cheap over last 10 years. I don't think we can solve this problem. It is the result of business itself.

[hugeblack]

If this analysis is realistic, then the ratio is not frightening. There is a percentage of fake volume trading in organized stock markets despite many restrictions that govern its work, let alone an unregulated decentralized market. The effort falls on individuals and governments to force currencies to show real trading volumes or at least limit lying.

For example, coinbase will be a little manipulative in the numbers before listing and other examples, and time makes a difference, so now it is dangerous to manipulate the numbers, which is different from last year.

[DaveF]

What we don't know, and cannot know is how much volume is done off exchanges. Did DaveF just give hugeblack $20000 in cash for 1BTC while we were at lunch together with stompix mediating the trade?

No we didn't.....but you can't prove or disprove it in any way. Hodl Hodl, LocalCryptos, Bisq there are a lot of traders with a lot of volume that never show up in any chart that I know of.

IIRC mycelium still has the local trader option and I think some other mobile wallets have a feature like that too.

-Dave

[LeGaulois]

Fair point but you forget to consider 2 different things.

Most of the volume comes from exchange platforms because it's the reality, that's where people trade. Sure, the study didn't consider the volume done IRL for example. We could also mention the DEXs and other places. But I believe (maybe wrongly) that it represents a minimal percentage
By the way, Institutional bitcoin trading volumes account for 99% of transactions over $100,000 and Only 13 crypto exchanges provide ‘trusted’ trading volume (yes I know it's a bit old but the trend hasn't changed a lot since)

Of course, the study isn't perfect but it still gives an overview

Now, who cares? Well, not really a good way to attract people to the crypto market I would say. It's a bit like lying in my opinion