ALL exchanges cheat on trading volume?

Are all cryptocurrency and bitcoin trading volumes just fake? Forbes took a close look at this issue and came to a devastating conclusion in the report.

The Forbes Study on Crypto and Bitcoin Transaction Volumes

According to the latest Forbes report, about half of all cryptocurrencies traded are affected by market manipulation. What does this mean in concrete terms? The business magazine assessed 157 different crypto exchanges for their Bitcoin volume and came to a dire conclusion. Almost all platforms simulate their trading volumes with BTC according to the underlying criteria – including Binance, BitMEX or Huobi.

The process, known as a “wash trade”, is a form of market manipulation. Typically, an investor sells and buys the same cryptocurrency to increase trading volume. For the investor, nothing will change in the short term, but for others, the demand for the currency seems high. As a result, more traders will flock to an asset like bitcoin and drive the price up.

Ultimately, the trader benefits because the manipulation allows him to sell the asset at a higher price.

Manipulated Bitcoin Transactions: Forbes Reports Disclosures

Exchanges in poorly regulated countries would often use this method to create an illusion of high volumes for outside investors. The platform must therefore be marketed as very popular and successful to the outside world. Trading bots are considered to be the most common tool as they eliminate the need for the aforementioned investor and generate automatic washout trades.

Forbes identified the problem with transactions on the most traded cryptocurrency, Bitcoin (BTC). To do this, the business magazine used 24-hour trading volumes from various analytics companies such as CoinMarketCap, CoinGecko, Nomics, and Messari. There were already notable differences here: CoinMarketCap had a volume of $32 billion on the day of the sighting, while Messari had a cap of $5 billion.

Here’s what the report says:

“There is no universally accepted method that dictates how the trading volume of a crypto should be calculated.”

Then there is the problem that some countries have no regulations or have lax supervisory authorities.

To provide an exemplary measure of the crypto market, the magazine team looked at Bitcoin volumes using certain methods of measurement. These include, for example:

  • The country in which the exchange is regulated
  • Site View Crypto Exchange Data
  • Number of clients of the crypto platform

Using this method, 157 exchanges were evaluated to eventually come to the sobering conclusion: half of Bitcoin’s volume is being manipulated.

For example, analysts point out that as of June 14, 2022, daily volume was $262 billion. In fact, according to the calculations, it was only $128 billion. The 262 billion was the sum of the figures given by the stock exchanges.

The report continues:

“The biggest problem is with companies that disclose large volumes of transactions, but operate in countries with weak regulatory oversight. For example: Binance, MEXC Global and Bybit. Together, the smaller exchanges account for US$89 billion worth of Bitcoin – but they say it’s $217 billion.”

The report categorizes the exchanges

Forbes managed to use the previous method to implement a sort of categorization of crypto exchanges that manipulate volumes. And it doesn’t look good!

At least 95% of all volumes are not fake, as previously reported by Bitwise in 2019.

That is why a division has been made into 3 groups: group 1 shows up to 25% less volume than the calculation indicates, group 2 up to 79% and group 3 up to 100%. 100% would mean that everything is manipulated or fake.

Surprisingly, even the world’s number one crypto exchange, Binance, is in the second group, with a “fake rate” of 45%.

It remains to be seen how and if ongoing crypto regulations can contribute to an improvement.

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