The Blockchain Transparency Institute (BTI) has collected the evidence for a long-running suggestion – that Tether (USDT) is used deliberately to sway crypto markets. Wash trading was noted in 64% of all trading activity.
34% of Tether Trading is Genuine
Recent research conducted by the Blockchain Transparency Institute has identified some alarming figures regarding the amount of wash trading that takes place among the leading cryptocurrencies. By calculating the disparity between the reported and adjusted volumes of each crypto, the BTI have been able to pinpoint the exact amount of volume that is ‘faked’ by crypto exchanges.
The 4th biggest cryptocurrency by market cap and largest stablecoin by volume, Tether (USDT), was found to be one of the most wash traded assets in the list. A whopping 64% of its volume is believed to be faked by wash trading, according to BTI’s findings.
According to the "Blockchain Transparency Institute"™️ ***only*** 64% of Tether is used for wash trading. pic.twitter.com/r9eVQTxxAV
— Giancarlo – Tethered since 2016 (@CasPiancey) September 30, 2019
The latest BTI report on wash trading involves 40 hand-picked exchanges that are cooperating with data sharing. BTI noted that in 2019, wash trading actually decreased by 35.7% among those markets.
According to our data, the cleanest exchanges over this time continue to be Kraken, Poloniex, Coinbase and Upbit. On the other side, OKEx and Bibox lead the exchanges with the highest percentage of wash trading in our real ranking of the Top-40. Fake volumes of these exchanges exceed 75%, nevertheless, their real volumes (with wash trades removed) still place them in the Top-20 consistently
A breakdown of separate coins shows that for BTC, wash trading makes up 48% of market activity. But there are worse offenders – 91.23% of Monero (XMR) deals are wash traded. For some small and illiquid coins, wash trading is prevalent.
Wash Trading Misleads About Price
Wash trading is the practice of selling and buying back tokens to artificially create high trading volumes. Some crypto exchanges do this routinely in order to fake the amount of activity on their platform and attract new customers.
Tether (USDT) is concentrated on Binance and OKEx, where analysts have noted signs of potentially faked or automated trading activity. Recently, OKEx denied to have wash trading on its platform, or faked volumes.
The growth of BTC prices in the past two years coincides with increased Tether minting. The leading stablecoin went from a small-scale asset with a few million coins, to the most actively traded coin. Now, USDT bot trading could be organized on multiple niche exchanges, as well as unlisted trading operations. USDT cannot be cashed out directly, and is often exchanged for other stablecoins that have the right legal apparatus to pay out in fiat.
Are you surprised by the BTI’s research? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter @Caspiancey