Forbes: exchanges overestimate bitcoin trading volumes

The outlet’s study showed that more than half of all trades with the first cryptocurrency are fake

27.08.2022 - 07:45

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What’s new? Experts at Forbes magazine conducted a study, which revealed that more than half of bitcoin trades on exchanges are fake. Experts noted the problems of weak oversight on the platforms and “wash trading,” due to which, among other things, volumes of trades of the first cryptocurrency are increasing. Experts stressed that the figure calculated by the platforms does not reflect the real picture, and also pointed to the lack of a generally accepted method of calculating it, even by the most reputable research companies specializing in the crypto industry.

Study by Forbes

Wash trading is the repeated buying and selling of the same asset by a trader over a short period of time in order to mislead other market participants about its price or liquidity.

What else does the study say? According to Forbes, as of June 14, 2022, the total daily trading volume of bitcoin was $18 billion, while exchanges bring in about $263 billion. Experts noted that “wash trading” is aimed at inflating the trading volume of an asset to create the appearance of rising its popularity. They added:

“In some cases trading bots execute these wash trades in tokens, increasing volume, while at the same time insiders reinforce the activity with bullish remarks, driving up the price in what is effectively a pump and dumpscheme. Wash trading also benefits exchanges because it allows them to appear to have more volume than they actually do, potentially encouraging more legitimate trading.”

Analysts said that the most problematic exchanges in terms of fake trading volumes are those that show high volumes but operate without regulatory oversight.

Earlier Forbes reported that the SEC intends to investigate all crypto exchanges that operate in the United States. The regulator targets, among others, the US division of Binance.

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