More than half of reported daily Bitcoin trading volume is likely fictitious, Forbes noted. Less regulated exchanges inflate their data more.
- According to Forbes, some exchanges inflate their daily trading data.
- The least regulated platforms are the ones that claim the largest movements.
- Bitcoin could be just the visible tip of the iceberg.
More than USD $40,000 million Bitcoin have been traded on cryptocurrency exchanges in the last 24 hours, according to data from CoinMarketCap. But: could it be that this figure is an illusion?
A recent investigation carried out by the data analysis department of Forbes has revealed that More than half the volume of Bitcoin traded daily is inflated by cryptocurrency platforms. The study, which was published by Forbes on Friday, it concluded after evaluating 157 digital asset exchanges around the world.
Extensive observation of trading volume data for the flagship cryptocurrency over the course of a day led to the conclusion that major exchanges appear to have less movement than they report.
More than half of all reported trading volume is likely to be false or uneconomic. Forbes estimates that the daily global volume of bitcoins for the industry was [USD] $128 billion on June 14. That’s 51% less than the [USD] $262 billion that would be obtained by taking the sum of the self-reported volume from multiple sources.
Forbes was based on self-reported data from exchanges and adjusted them to reality through a quantitative and qualitative analysis methodology. He also turned to data from external trackers CoinGecko, CoinMarketCap, Nomics Y Messari to refine the analysis and ignored transactional data due to its susceptibility to manipulation.
Daily trading volume is inflated
The transaction volume of Bitcoin fictitious is shaped by factors such as called “wash trade” (a way to falsify the trading volume of an asset) and the lack of vigilance over the operations of exchanges, he noted Forbes.
“The most problematic areas regarding fake volume are companies that tout high volume but operate with little or no regulatory oversight that would make their numbers more believable.“, highlighted the study.
In this sense, Forbes indicated that the less regulated exchanges are those that claim higher daily movements of Bitcoin, one reason why their numbers may not be considered reliable. The research specifically mentioned companies Binance, MEXC Global Y bybithighlighting that these represent approximately USD $89,000 million of the real volume of Bitcoin traded daily, although the three together claim to move almost triple that figure.
In total, the least regulated exchanges in our study account for roughly $89 billion of actual volume (they claim $217 billion).
The research also points to the much-criticized wash tradea practice to inflate the trading volume of an asset that is often exploited to create a false impression of popularity. “In some cases, trading bots execute these wash trades in tokens, increasing the volumesaid the report, which later added:
Wash trading also benefits exchanges because it allows them to appear to have more volume than they actually do, potentially encouraging more legitimate trading.
Bitcoin it’s just the tip of the iceberg
It should be noted, how well it does Forbesthat actually there is no universally accepted method for calculating daily volume of Bitcoin objectively. Even data trackers come up with significantly discrepant numbers, presenting a challenge for research and analytics firms in the crypto space.
For example, for the time of editing, CoinMarketCap reflects a volume of USD $42,000 million for Bitcoin in the last 24 hours, but CoinGecko puts this same metric at US$35.6 billion, while Messari at USD $7.7 billion.
This discrepancy, and thus the broader issue of inflated trade volume, is not just a problem of Bitcoin. As the study concludes Forbesif the data is reported irregularly for the trading of the main cryptocurrency, it is possible that the same will happen for many others tokensespecially for the smallest and least guarded.
“At its best, trading volume is one of the most measurable signs of investor interest, but it can be easily manipulated to convince novice investors that it’s much more in demand than it really is.“, warned the publication.
Forbes is not the first to find irregularities between self-reported data by crypto exchanges and trading volumes”real“. Last year, one research Realized by bitwise asset management, which analyzed data from 81 cryptocurrency platforms, concluded that approximately 95% of the daily trading volume of Bitcoin reported in CoinMarketCap it was fake
Article by Hannah Estefanía Pérez / DailyBitcoin
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