Recent research conducted by Forbes has shown that a lot of crypto trading data from exchanges is fake
Research by the Head of Data and Analytics at Forbes’ crypto asset division, Javier Pax, reveals that there is a large mismatch between actual bitcoin trading data and a crypto exchange report.
Due to the lack of regulation and any standards of reporting, there have been big concerns about how accurate is the data provided by crypto exchanges. Now, Forbes says that most of it is “fake”.
Intentionally inflated trading data reported
Pax researched 157 crypto trading venues, although none of them are named in the article. Their analysis showed that more than 50 percent of all trades with bitcoin are fake or wash trading.
The analyst refers to the figures of BTC trading volume. On June 14 it constituted $128 billion by his estimates. However, other multiple sources of self-reported volume was roughly twice as big – $262 billion.
Two reasons are possible here, the authors of the article say. First if he intentionally pumps his trading volume figures while reporting unregulated exchanges. This is an easy way for them to get more attention and customers. In 2019, it was revealed that 95 percent of the data displayed by the largest website with data on exchanges – CoinMarketCap – was incorrect.
According to the research, smaller and the least famous exchanges in the crypto market take to this method of promoting themselves. Their volumes are 80-99 percent smaller than they prefer to report.
Wash Trading by Whales
The second interpretation is called “wash trading”. This is when the whales open up and then immediately move into a close position. Big traders use this illegal technique to show that there is a high demand in the markets to manipulate the latter. Wash trading is efficient when it comes to pump-and-dump strategies.
While, the research made by Forbes is related only to Bitcoin, it is not hard to imagine what is happening with small-cap cryptocurrencies when exchanges report trading volumes on those.
