A recent study by crypto data platform, The TIE, claims that the reported trading volume data provided by 75% of cryptocurrency exchanges is not genuine and that a majority of them use wash trading and transaction mining to mislead the market.
The findings were based on the number of web visits to the top hundred cryptocurrency exchanges who reported a combined $15.9 billion figure in daily trading volumes for the last thirty days.
The number of estimated monthly visits to the exchanges was divided with the reported trading volumes within that period with the aim of providing the average reported volume per visit.
Ridiculously, the results showed that while some exchanges had trading that reasonably aligned with their number of monthly visits, the majority recorded an average trading volume per visit that was nearly impossible.
For instance, while top crypto exchange Binance reported $750 traded per visit, China-based DOBI and CHAOEX reported a whopping $356,625 and $393,953 per visit respectively.
Other exchanges that returned a moderate trading volume per visit include:
- Coinbase Pro($341)
- Bittrex ($138)
- Bitstamp ($507) and
The results revealed that the average trading volume per visit for top-ranked cryptocurrency exchanges namely Binance, Coinbase Pro, Poloniex, Gemini, and Kraken was $591.
Using that figure as a gauge for the top hundred exchanges would mean that the real estimated trading volumes of these platforms would drop from the $15.9 billion they reported in the last thirty days, to a mere $2.1 billion.
While it popularly held that crypto exchanges inflate trading volumes as a way to attract new traders to their platform, the recent study is a cause for worry given that the consistent manipulation of market data is one of the reasons why U.S regulators are yet to greenlight a Bitcoin ETF.
On the positive side, though, there are still a few exchanges (25%) that could be relied on for accurate market data.
In a similar development, Coinfomania reported last month that the bear market resulted in a reduction of activity on crypto exchanges, even though Binance continues to lead the pack in terms of trading volumes.