More than half of Bitcoin volume on crypto exchanges fake: Report
- More than 51 percent of the total
Bitcoin trading volume on variouscrypto exchange this year is false. - According to data provided by niche news publisher BanklessTimes.com, the majority of this fake Bitcoin volume is due to laundering.
- According to the report, fake trading volume can be a way for exchanges to attract new customers.
More than 51 percent of the total Bitcoin trading volume on various crypto exchanges this year is fake amid volatile global economic conditions, a new report has claimed.
Bitcoin is the blue chip of cryptocurrency and represents 40 percent of the total outstanding crypto assets in the emerging and volatile crypto markets. The market value is currently 382.25 billion.
According to data provided by niche news publisher BanklessTimes.com, the majority of this fake Bitcoin volume is due to laundering.
Wash trading is illegal, where an asset is bought and sold simultaneously on the same platform to create false liquidity. This is often done by robots or fake orders.
“It is difficult to talk about cryptocurrency without talking about Bitcoin. Yet there is a concern that a large part of the daily traded volume of Bitcoin is fake. This calls into question the legitimacy of exchanges and the reliability of data,” said Jonathan Merry , CEO of BanklessTimes.
Another factor contributing to the fake volume is stablecoins like Tether (USDT).A
Tether pairs very well with Bitcoin and is often used to buy and sell Bitcoin on exchanges.
“This results in a lot of volume being generated without any actual Bitcoin changing hands,” the report said.
According to the report, fake trading volume can be a way for exchanges to attract new customers.
By appearing more popular than they actually are, exchanges can trick investors into thinking there is more activity and liquidity on their platform.
Another reason people may engage in laundromat is to prop up the price of a particular asset, according to the report.
By buying and selling the asset at the same time, they can create the illusion of demand and drive up the price. This can be done for personal gain or to artificially inflate an asset price before you sell it.
“Investors should be wary of exchanges that report fake numbers. You need to do your research and only use exchanges you trust,” the report suggested.
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