Huge Number Of Bitcoin Exchanges Report Suspicious Trading Volumes

The trading volume of an exchange is often used to rank the exchange by popularity. Indeed, it’s common sense that an exchange with a high trading volume should be deemed popular, it simply means that there’s a lot of people using the exchange at a specific moment in time, though, trading volume can tell us and the exchanges themselves an awful lot more about what might be going on in the markets. This is why we should be concerned that according to some reports, 75% of Bitcoin Exchanges have reported suspicious trading volumes, with further research suggesting that as much as 86% of all cryptocurrency exchange reported trading volumes should be met with suspicion.

According to CCN, a research site called TheTie have recently explored the matter further:

“A site called TheTie released a report that estimates over 86% of all reported Bitcoin exchange volume is suspicious, while 75% of exchanges report extremely dubious volumes. The research uses a different formula than other reports have: it values each website’s visitors and compares that value to the reported figures.”

TheTie offer a number of examples to backup this claim:

“Bithumb, which has been the subject of previous investigations, was expected to have a monthly volume of roughly $1.2 billion based on an average visit value of $13,418. Instead, Bithumb reports over $28 billion. This means their reported volume is nearly 2,000% higher than what would be expected.”

This is important, as fake volumes could mean that traders are being attracted to ‘high volume’ exchanges, unknowing that the reported volume is actually false. Investors look for exchanges with high volumes as with high volumes comes an element of trust. Moreover, the best prices tend to be found at the more popular exchanges. Now it seems that many investors may be choosing exchanges based on reported trading volume values that could indeed, be fake.

TheTie offer quite a stark conclusion that highlights the problem here:

“The weighted average trading volume per web visit for Binance, Coinbase Pro, Gemini, Poloniex, and Kraken was selected as a baseline volume per user to calculate expected volume. This amounted to $591 per web visit. BitMEX was not included because it is a futures exchange. This does not account for mobile app or API usage to trade – web traffic is an assumption for simplicity. Relative outlier detection is quite notable, so the outright number isn’t the main objective.”

In short, there’s a lot of exchanges that could be affected by this.