Topic: Forbes says Half of Bitcoin trading volume is fake (Read 326 times)

A wash trade is a form of market manipulation in which an investor simultaneously sells and buys the same financial instruments to create misleading, artificial activity in the market place. First, an investor will place a sell order, then place a buy order to buy from himself, or vice versa. It's also happened on the stock market, but it will be controlled by the new rules and regulations. In the case of crypto-currencies, making such laws will hope that the future market will be more reliable than nowadays.

The thing is that that volume would be minimal because we would each have  to get our share of the profit, so hugeblack would have to sell to you at a premium, I will take my fee, and all of us will have to pay for bank transfers and so on and in the end if you would want to sell those coins again you will have to add all that on top of your profit margin so nobody will buy from you until the price goes up.

While on CEX you can make trades for a change of 100$ in price and still get profit with the minimal 0.05% fees doing this over lb, bisq or anything else is impracticable. And speaking of LB, they do release their volume, and it's quite low,  $8 million a week, just over a million a day. And even Bisq release those and they are far lower than LB.

Rather than calling those trades I would say people over LB,LC Bisq and others are buying coins, like buying and keeping them in their stash rather than trading in CEX where you buy and sell them over and over for each 1% gain.

This situation is not new, in fact, the government and the stock exchange have been using this strategy to deceive the people. There is this unhealthy competition between these exchange companies. Each of them one to prove that it has the largest customer base. This situation can lead them to fraudulently increase the volume of their trade. But this analysis might not be realistic because most of these exchange firms would not give the research firm accurate data. I am thinking they just used estimation for the research work.

Probably a fun debate here.
My view is big people with the big money are the ones that move the market. 100000 people trading $100 are going to have less of an impact then 1 person trading $10000000 since if they put it all in 1 huge buy or sell it can move the needle. From what I can see the exchanges with fake volume are just 'moving' the same $10 around and around at the same price. Some people may see it, some people may even believe it, but in the end it is not doing anything to the price of BTC and what real traders see and think and do. Obviously this is all just my opinion.

As for the who cares, perhaps not the best wording I would go with, in the end the people who are swayed by the obviously large fake volume are the same ones who invest in the DaveF will make you a millionaire token with this magical internet money token and there is very little we can do to save people from themselves.

Sub points.
1) I also think that there is *some* fake trading that is not as fake as people think it is with some of the larger exchanges, it's just REALLY poorly programmed trading bots.

1a) I am not a programmer but I have seen some WTF code in a few of them which was why I said that.

2) Some of those bots might not be poorly programmed, but done deliberately to drive up peoples trading fees to make the person who wrote and sold the bot a referral commission from the exchanges who are taking the fees.  

3) I think the altcoin / token section here does more damage to attracting people to come and stay with the crypto market then the fake volume. With the full disclosure that I do have and trade alts / tokens but understand that it is gambling.

-Dave

This is the comment I was looking for. In every market there is fake volume in different margins. Half of it means very generous, I believe this is more than 90% if you also count automated bots it may go higher. So, what does it matter? This is the working mechanism now. If you remove this volume you will see liquidation problems etc. Trading bots and other automated programs have some downsides but I can't imagine a trading pair without them. We have some local exchanges without bots, they have almost no volume so people can't do anything there even if they want.

Although I am not sure whether we can really rely on this report or not, I do know that even if they say I am leaving the market, there can be more than half fake trading volumes on the market. There is no doubt that as bitcoin adoption progresses, there will be fewer fake trading volumes, as the governments have stated, and that is the case. As a result of the fake trading volumes or the possibility that this may be used for sinister purposes, they say adoption is necessary. That is how they force us to adopt, which can be good or bad. I believe that if this report is received for bitcoin, it could have a negative effect on other cryptocurrencies as well.

Fair point but you forget to consider 2 different things.

Most of the volume comes from exchange platforms because it's the reality, that's where people trade. Sure, the study didn't consider the volume done IRL for example. We could also mention the DEXs and other places. But I believe (maybe wrongly) that it represents a minimal percentage
By the way, Institutional bitcoin trading volumes account for 99% of transactions over $100,000 and Only 13 crypto exchanges provide ‘trusted’ trading volume (yes I know it's a bit old but the trend hasn't changed a lot since)

Of course, the study isn't perfect but it still gives an overview

Now, who cares? Well, not really a good way to attract people to the crypto market I would say. It's a bit like lying in my opinion

What we don't know, and cannot know is how much volume is done off exchanges. Did DaveF just give hugeblack $20000 in cash for 1BTC while we were at lunch together with stompix mediating the trade?

No we didn't.....but you can't prove or disprove it in any way. Hodl Hodl, LocalCryptos, Bisq there are a lot of traders with a lot of volume that never show up in any chart that I know of.

IIRC mycelium still has the local trader option and I think some other mobile wallets have a feature like that too.

-Dave

If this analysis is realistic, then the ratio is not frightening. There is a percentage of fake volume trading in organized stock markets despite many restrictions that govern its work, let alone an unregulated decentralized market. The effort falls on individuals and governments to force currencies to show real trading volumes or at least limit lying.

For example, coinbase will be a little manipulative in the numbers before listing and other examples, and time makes a difference, so now it is dangerous to manipulate the numbers, which is different from last year.

I think everyone in forum knows this is definitely, 100 per cent true. Although I also think it does not matter at all. Year is 2022 and not only cryptomarkets, every market has fake volume. Markets became best place to generate money very quickly. There are many options, like bots as example, became very popular and cheap over last 10 years. I don't think we can solve this problem. It is the result of business itself.

The other question is, does anyone care?
Seriously, the big money people traders don't even look at the obviously fake exchanges, the big corporate players are all doing it with the Coinbases of the world.
The little joke places with the obviously fake volume on CMC or Gecko don't really do anything in the real world so they can post any numbers they want.
If the BTC <-> fiat or whatever numbers don't move you can put up anything you want, it's just a pretty picture. It does not matter.

-Dave

Centralized exchanges are a part of Bitcoin ecosystem, and when people say "Bitcoin" they often mean the whole ecosystem. It's okay to not care what governments and other big players think. But for those who are interested in Bitcoin's price performance and wide adoption, those things are important.

51% of the volume is fake, for the rest of it we don't have yet proof it's fake!

We all know a lot of the volume is fake, we have exchanges that have halted withdrawals and deposits and are still sending to indexers millions in claimed trade volume, millions as in hundred of millions. The same happens when some exchange gets hacked and we see that despite them making the same millions in volume each day they only had like 1000 BTC in their wallet and they can't even cover that and are going bankrupt.

The only way to get the real volume would be to get all the financial fillings from those exchanges and see the true numbers behind it since it's really hard to claim you're doing a billion a month in volume but your revenue is content in pennies.
I love those moments when somebody comes and asks about an exchange, nobody on the entire forum uses it or knows something about it but when you look at coingecko or cmc you see billions a month in trades, like seriously, how?

As with ownership numbers, I wonder when global usage will indeed increase to some serious levels, what will they claim, trillions per second?

I've seen similar estimates a few years ago, I believe, so it's not anything new that's going on, right? When it comes to total trading volume, there've been reports claiming much worse figures than the current 51%. In 2019, there was an article about 95% of the volume being fake, and about 70% of volume on Coinmarketcap being fake. As for Bitcoin trading volume, 50% was claimed to be wash trading. So these stories have been going on for years, and I guess they are even likely to be true. But there's clearly enough volume on big exchanges for big purchases and sales, so I don't think we should be too concerned.

A lot of things are fake in the world of cryptocurrencies, and we have known that CEX fakes trading volume since the time when the Chinese did it, from whom everyone else obviously learned the job very well. Given that all of them (CEX) are struggling to prove themselves as successful as possible and to attract as many new clients as possible, it seems to me that this kind of business practice will continue.

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In that case, we could then talk about trust in companies (CEX), and not in Bitcoin, which cannot be held responsible because someone manipulates trading data. If that's an excuse for them not to believe, then it's a really stupid excuse. Apart from that, I don't really care what governments and some rich investors think, because for most of them Bitcoin will always be a problem.

Every market goes through ups and downs and Bitcoin is no exception. However despite of all the rollercoaster ride Bitcoin has actually emerged stronger over time. This time too Bitcoin will emerge stronger and we all need to actually see that every month one or other big corporations or government is adopting Bitcoin. With the kind of expansion we are seeing Bitcoin is only going to go up.

Not the first time that we heard this news though, I remember there was a website that track all or almost all the data and tell us who's who in terms of wash trading, unfortunately I can't find it anymore. It was like in 2018 or 2019.

Anyhow, even if we've seen this before, bitcoin is still going strong, last year we have all time high and then the usual bear market. So I would say that it doesn't have any effect at all. Maybe some will find it negative, but as I have said, like every month there could be someone mentioning in the public about wash trading but it was just ignored.

It's still difficult to identify or to know the exact numbers who much the fake volume currently on the market because of these centralized exchanges.
There are some exchanges that are not transparent, that's why I can say it's difficult, there are also some exchanges that are manipulating it so numbers regarding centralized exchanges like volumes must not need to be fully trusted.

Although the number is quite high, it could indeed be true. This has been a rampant issue among exchanges, especially among those that are unheard of and among coins and tokens that are unpopular. But this has been an issue for several years. There's nothing surprising about this. Even when I was new in the market, the issue of fake volumes and fake trades is already present. Imagine unknown exchanges claiming billions in their 24-hour volume. And if we actually look at the orders in exchanges, it is more or less obvious how bots are actually trying to fake trades.

I guess this is one big reality that we are facing in the world of cryptocurrency trading and it is because this remains to be largely unregulated industry and players from different parts of the globe are not following a standard set of rules for guidance and implementation. Therefore, am not seeing any major solution to this fake figures in the foreseeable future...especially since some figures are just based on self-reporting mechanism. Now, am just wondering what are the negative things that fake volume can lead to?