More than half of Bitcoin volume on crypto exchanges fake: Report
A new report claims that more than 51% of all Bitcoin trading volume this year on different crypto exchanges is faked due to volatile global economic conditions.
Bitcoin is the most popular cryptocurrency. It represents 40% of all crypto assets in the volatile and new crypto markets. Its current market cap is 382.25 billion.
According to BanklessTimes.com data, most of the fake Bitcoin volume comes from wash trading
Wash trading, which involves the simultaneous purchase and sale of assets on one platform, is illegal. This creates false liquidity. This is often done using bots or spoofing commands.
“It is difficult to talk about cryptocurrency and not mention Bitcoin. There is concern that Bitcoin’s daily traded volume may be fake. Jonathan Merry, CEO at BanklessTimes, said that this raises questions about the legitimacy and reliability of the exchanges.
Stablecoins like Tether (USDT) are another factor that contributes to the fake volume.
Tether works well with Bitcoin, and can be used to purchase and sell Bitcoins on exchanges.
According to the report, this results in a lot of volume generated without Bitcoin actually changing hands.
The report states that fake trading volume could be used by exchanges to attract customers.
Exchanges can appear more popular than they really are to fool investors into believing there is more activity or liquidity on their platform.
According to the report, another reason why people may engage in wash trading would be to prop up the value of an asset.
They can create the illusion that there is demand by simultaneously buying and selling an asset. This will drive up its price. This can be done to gain personal gain, or artificially increase the asset’s value before selling it.
“Investors should be cautious about exchanges reporting false figures. The report recommended that you do your research and only trust exchanges.