Fake Bitcoin trading volumes continue to plague the crypto industry
Editor’s Note: With so much market volatility, stay tuned for daily news! Get caught up in minutes with our quick summary of today’s must-read news and expert opinions. Sign up here!
(Kitco News) – The volume of crypto traded on exchanges has long been a controversial statistic as it is a well-known fact that a significant amount of wash trading occurs every day to help make the sector appear more active than it is.
Despite the increase in global adoption and increased awareness that the crypto ecosystem has gained in recent years, a new report from Forbes shows that 51% of all reported trading volume should be considered fake volume, a sign that wash trading is still very prevalent.
According to the US Commodity Futures Trading Commission, wash trading is defined as “entering into, or purporting to enter into, transactions to give the appearance that purchases and sales have been made, without incurring market risk or changing the trader’s market position.” Laundry trading is illegal based on the text of The Commodity Exchange Act.
In its investigation, Forbes analyzed trading volume data from 157 cryptocurrency exchanges and determined that “More than half of all reported trading volume is likely to be fake or non-economic.”
The business magazine estimated that Bitcoin’s (BTC) global daily industry volume was $128 billion as of June 14, which was “51% less than the $262 billion that would be obtained by summing self-reported volume from multiple sources.”
Forbes also noted that “there is no universally accepted method for calculating Bitcoin daily volume,” so any numbers used should be considered the best estimates possible based on available data.
Based on the survey’s findings, “21 crypto exchanges generate $1 billion or more in daily trading activity, while the next 33 exchanges had volumes between $200 million and $999 million across all contract types, spot, futures and perpetuals.”
Cryptocurrency exchange Binance is the dominant player on the world stage when it comes to trading Bitcoin, with a market share of 27%, followed by FTX. In the world of Bitcoin futures trading, Chicago-based CME Group is the market leader.
The biggest problem identified by Forbes is the fact that many of the firms reporting large volumes “operate with little or no regulatory oversight that would give their numbers more credibility,” pointing directly to Binance, MEXC Global and Bybit. “Together, the less regulated exchanges in our study account for about $89 billion of the real volume (they claim $217 billion),” Forbes said.
When it comes down to it, these findings are a big part of why the Security and Exchange Commission (SEC) has so far refused to approve a spot Bitcoin ETF. And judging by the amount of laundry that still exists, it seems unlikely that an approval will come anytime soon.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.
