Half of the Reported BTC Trade Volume is Likely to be Fraudulent
A Forbes analysis of 157 exchanges discovered that Bitcoin trading volume may not match what the businesses say, especially if they are small or unregulated.
According to a Forbes report dated August 26, Javier Pax of the news outlet's digital asset unit stated that there was a disparity between Bitcoin (BTC) trade statistics given by crypto exchanges and actual numbers.
The Forbes contributor discovered that a group of small exchanges had BTC trading volumes that were roughly 95% lower than those reported, whereas those operating with little or no regulatory oversight, such as Binance and Bybit, claimed to have more than double the analyzed volume: $217 billion versus $89 billion.
“More than 50% of all reported trading volume is likely to be fraudulent or non-economic,” said Pax. On June 14, the worldwide daily Bitcoin volume for the sector reached $128 billion. That is 51% less than the $262 billion obtained by adding self-reported volume from several sources.
He added that if reported trading volumes for BTC, the most regulated and widely monitored crypto asset in the world, are untrustworthy, then metrics for even smaller assets should be regarded with a grain of salt. At its finest, trading volume is one of the most quantifiable indicators of investor interest, but it can be readily managed to deceive inexperienced investors that it has far more demand than it actually does.
Pax cited a 2019 Bitwise Asset Management report, which said that 95% of reported crypto trading volume on unregulated exchanges looked to be falsified or the consequence of non-economic wash trading.
Lastly, a Chainalysis report released in February stated that wash trading was becoming a source of anxiety among non-fungible token holders, however, the bulk of trades utilizing this approach were unprofitable.
