Do Crypto Exchanges Fake Their Trading Volume?
We want to say that we have shocking news for you, but to be honest, we suspected that trading volumes can be fabricated. As The TIE reports, 75% of exchanges reported trading volumes are more than double what they really are.
We have our series of ranking of European exchanges. You can already check out which Polish exchange is the best, or which exchange is ahead of everyone in the UK. As it turns out, some of the data may be fake.
Fine feathers make fine birds
The TIE is one of the most recognizable platforms for crypto traders. From time to time, it publishes interesting reports about the cryptocurrency industry. This time, the website researched reported vs real trading volume of exchanges.
11/— The TIE (@TheTIEIO) 18 marca 2019
75% or exchanges reported trading volumes that were more than double what we would have expected. In the chart below those exchanges are colored red.
The exchanges that had expected volume/reported volume ratios greater than 50% were colored green. pic.twitter.com/RamD4dGaLY
The whole thread explains the methodology of this research. The cryptocurrency world has had to fight with allegations that this industry is nothing more than just a speculative bubble. However, crypto exchanges decided to shoot themselves in the foot. According to the report, 87% of 100 named exchanges are potentially suspicious. On the other chart, The TIE showed a visual comparison of reported vs expected trading volumes. The further to the left and top an exchange is, the higher the ratio is.
8/— The TIE (@TheTIEIO) 18 marca 2019
Next, we multiplied each exchanges’ web views by this $591 to calculate what we would expect their volumes to look like.
In the chart below the further to the left and top an exchange is, the higher that exchanges reported vs expected trading volumes. pic.twitter.com/uvACvsIllz
The righteous exceptions
Fortunately, not every one of them cheats on reported trading volume. There are some platforms which give correct reports.
The best one is Binance. The biggest exchange in the world isn’t on the chart because it is such a significant outlier that the chart wouldn’t be readable if Binance was on it.
KuCoin and CoinDeal also perform very well in this comparison. Beside them, 10 other exchanges are over 100% in real/expected trading volume.
According to The TIE, the largest 100 exchanges should have $2,1 billion trading volume per day. Currently, that number equals $15,9 billion. So, almost 87% of all trading volume is potentially suspicious.
Faking trading volumes is nothing new. We already knew that some exchanges may fabricate their reports to be higher in the rankings. We just didn’t realize that almost every one of them does that. If The TIE report is correct, the cryptocurrency industry has a real problem to deal with.
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