Bitcoin trading plagued by 50% fake trades? Let’s unravel the true from the false

50 shades of faux – And if one in two exchanges of bitcoin was wrong… for real? Explanations on the revelations of an astonishing investigation which analyzes trading platforms and their transactions.

Inflate Bitcoin to sell it better?

And according to this survey conducted by Forbes, the trading volumes of Bitcoins are voluntarily inflated in order to give more credit to the queen cryptocurrency, and especially more weight to the exchanges, in order to always attract more customers.

Indeed, the newspaper estimates that nearly half volume of bitcoins traded on exchanges would be fake. This “false” volume would be intended for ” brew of cryptocurrency to give a mass impression, but without any real economic value.

The lack of regulatory oversight over these numbers would encourage some exchanges to continue artificially inflating their numbers. According to the study, the “cleanest” exchanges would be Binance, FTX or even OKX – so much so that it defines a new “top” of exchanges according to their actual volume.

“Actual” trading volumes of exchanges, estimated by the study.

The practice is not new and will not knock anyone out of their chair: already in 2018, Israeli researchers looked into the famous fake volumes of the cryptosphere. At the time, according to their research, nearly 60% of exchanges were at least partially tampering with their public volumes. Specifically, their study estimated that volumes at the time were inflated by nearly 35% for Bitcoin and Ethereum, and 15% on smaller top 100 cryptocurrencies at the time.

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Cryptocurrencies: unraveling the real from the fake

The regular addition of new stablecoins and the establishment of futures contracts on the Bitcoin would not facilitate the visualization of reality. This phenomenon would be amplified by the fact that exchanges, which cannot obtain American bank accounts, brew a lot of flows to obtain liquidity in dollars.

So, are half of the transactions really fake, just to inflate numbers? According to this study, it is! Keep in mind, however, that the study was conducted using figures that are sometimes estimated, sometimes retrieved via other data providers (such as the very good Messari), so it remains to be confirmed over time.

Moreover, these global studies, which are often a little sensationalist, rarely make the difference between real “false” volume and the sometimes very substantial continuous exchanges operated by market makers… precisely to allow the “real” volume to manifest itself.

Anyway, whether the figures announced are true or not, Bitcoin remains the master in its category. And if the platforms voluntarily inflate their figures (which, it must be admitted, would not really be a surprise), it is to highlight the fact that they allow to buy and trade the number 1 cryptocurrency!

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