Over half of Bitcoin trades are fake according to analysts

Sushree Behera

Did you know that Bitcoin still occupies the most space, although the crypto market is flooded with 20,000 digital token currencies? The global total market economy in digital assets amounts to 1 trillion dollars, and Bitcoin holds 40% of it, i.e., 400 Billion Dollars.

But Bitcoin is highly criticized as well. This is mainly because of the lack of oversight on its trading practices and the activity of Wash Trading. In this article, we will discuss all these aspects in detail and concur with the truth about fake Bitcoin trading.

Wash trading: what is it

Wash Trading is an activity that takes place when an individual or an entity partakes or fakes taking part in transactions without changing any positions of the trader or even taking any risk. This gives a mirage that a trade, i.e., purchase & sales, has happened when in reality, it is fake. 

If we go by the analysis, Binance, MEXC Global, and Bybit are some of those companies that are the shadiest in terms of fake volume. They declare that they have a huge trade level, yet they are working with inadequate oversight and no credibility

In March 2019, there was a white paper published by Bitwise. It reported that only 5% of CoinMarketCap’s Bitcoin trading volume was real, which means 95% of it was fake and phony.

Findings of the claim that half of Bitcoin trading is fake

After a study in Forbes, there were several factoids that came out of it. We have discussed the findings about this claim below.

Self Reported volumes from a number of sources amount to $262 billion approximately. This number is an estimated total of everyone’s self-claimed volumes. On June 14, when Forbes calculated the real volume, the number was $128 billion, which means only 49% of the total claimed volume is real, while 51% is phony. That is almost more than half of it was never real.

The global leader in the stablecoin, Tether is still leading in the crypto economy, more importantly in Bitcoin-related trade. The capitalization in the Bitcoin market is $68 billion, but numerous queries regarding its reserves exist.

In terms of the Market Share of institutions, Binance takes the crown with almost 27% share in the market. The second position, there is FTX and then OKX. In the futures trading arena in Bitcoin, CME Group, which is present and functions in Chicago, holds the majority of the market share. 

The area where this problem lives the most is where the volumes are high, but there is very inadequate oversight. There is no credibility for the numbers they propose. Some of the biggest companies that have this problem are Binance, MEXC Global, and Bybit

New Trading Assets and Products being created propose a lot of problems for the authorities and organizations on the national level in regulating and keeping the Crypto Market in check. These like creations may be Stablecoins and Perpetual futures

The west prefers trading Bitcoin against the U.S. Dollar or the Euro or British Pound. But the reality is that a huge number of Bitcoin Trading happens against fiat or real currencies like the Japanese Yen and Korean Won. A lot of trading also occurs against big stablecoins like USD coins and Binance U.S. dollars

In a month, almost 573 Million individuals visit Crypto Exchange Websites. These are the findings according to the Forbes research. 

Read also: Privacy coins: what are they and are they legal?

Quantitative and qualitative assessments

When Forbes did research about fake bitcoin trading, they assessed the situation and analyzed it both in a quantitative as well as qualitative manner. The numbers that we have presented because of this study are a result of such thorough research. 

Seeing only the numbers would not provide any form of solution to this humongous issue regarding fake trading in the bitcoin market. They also studied the quality of trading in companies like Binance and Bybit. This helps us to show how their lack of adequate credibility poses a threat to the credibility of the numbers they claim and hence the reality of the trade and wash trading.

They analyzed more than five datasets and then provided statistics about a company. They do not work like other non-thorough researchers who do the tests and study on transactional data, which is sometimes duped.

Is the claim that half of Bitcoin trades are fake true?

We started with the question if more than half of the Bitcoin Trading is fake. In the end, it is conclusive by Forbes research as well as Bitwise research that this is in fact true.

We gave you the conclusive findings of the Forbes research. The solution to this is to create more credibility. There are needs to be more adequate oversight of the trading in the companies like Binance, Bybit, and MEXC Global. The financial authorities need to create more accountability in this trading so as to keep it in check. However, it seems safe to say that a significant portion of them are indeed fake.

This is likely due to the fact that Bitcoin is still a relatively new and volatile asset. It is ripe for manipulation by those with ulterior motives.

Read also: Who are the richest in the world of cryptocurrencies? The top 5 crypto billionaires

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