Ninety five percent of spot bitcoin trading volume is faked by unregulated exchanges, according to a new study.
div > div.group > p:first-child"> An analysis published by Bitwise this week shows that 95 percent of bitcoin spot trading is faked by unregulated exchanges. The survey, first reported by The Wall Street Journal, echoes concerns by regulators that cryptocurrency markets are still ripe for manipulation.
The analysis showed that"substantially all of the volume" reported on 71 out of the 81 exchanges was wash trading, a term that describes a person simultaneously selling and buying the same stock, or bitcoin in this case, to create the appearance of activity in the market. In other words, it's not real.
The San Francisco-based firm compared at Coinbase Pro, which reports about $27 million in average daily volume in bitcoin. Its median"spread," or difference between the price a seller wants and the price a buyer wants, for bitcoin was about 1 cent. That scenario passed Bitwise's test for having real volume.
Exchanges may have an incentive to report fake volume. Bad actors may look to attract listings for new initial coin offerings, or ICOs, who want their cryptocurrency on an exchange where more trading goes on, Bitwise said. Those fees can run from $1 million to $3 million per listing, according to data from Autonomous Next.
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