According to a Forbes’ report, more than half of daily trading volumes for Bitcoin, the largest cryptocurrency in the world, are false.
Being the pioneer cryptocurrency and the most well-known, Bitcoin rules the markets for digital assets. More than 40% of the market capitalization of all cryptocurrencies are held by it.
Although it is anticipated that Bitcoin trade volumes will much outperform those of other cryptocurrencies, this Forbes’ report suggests that these numbers may have been exaggerated.
Forbes Says 51% Of Daily Trading Volume Are Fake
Per Forbes report, 51% of the daily Bitcoin trading volumes listed on exchanges are probably fraudulent or for non-economic purposes. Forbes obtained the information by examining 157 cryptocurrency exchanges located in various nations.
— Forbes Crypto (@ForbesCrypto) August 26, 2022
Basically, Forbes estimated that the industry’s daily global Bitcoin volume was $128 billion using June 14 as the reference date. In light of this, the $262 billion that would result from adding the self-reported volumes from various sources is 51% lower.
Additionally, firms like Binance, MEXC Global, and Bybit, which advertise big volumes but operate with little to no regulatory oversight, are among the most problematic areas with phony volumes, according to Forbes.
According to the Forbes report, the less regulated exchanges account for around $89 billion of the actual volume (although $217 billion is claimed).
21 cryptocurrency exchanges generate $1 billion or more in daily trading volume for Bitcoin, while the following 33 exchanges saw volume between $200 million and $999 million.
The report also noted that there is no genuine method of calculating bitcoin daily volume, “even among the industry’s most reputable research firms”.
“For example, CoinMarketCap puts the latest 24-hour trading of bitcoin at $32 billion, CoinGecko at $27 billion, Nomics at $57 billion and Messari at $5 billion,” the report revealed.
Binance Remains Top Exchange
While CME Group dominates the derivatives market when it comes to futures trading, Binance, FTX, and OKX hold the top spots for spot markets. The American company takes great satisfaction in being the biggest derivatives market in the world.
Nevertheless, the analysis acknowledged that smaller exchanges had a tendency to overestimate as well. The investigation found that these smaller organizations Bitcoin
“The biggest problem areas regarding fake volume are firms that tout big volume but operate with little or no regulatory oversight that would make their figures more credible,” the report said. It noted that Binance, MEXC Global and Bybit are among these companies”
Binance traded $89B worth of bitcoin, which is more than 58% less than the $217B claimed. A further finding from the report was that 573 million people visit exchanges each month.
In an interview he gave to Forbes two months prior, FTX CEO Sam Bankman-Fried reportedly discussed his belief that many cryptocurrency exchanges are insolvent, even if they try to hide it.
At the time, Coinbase’s competition had lost $432 million and had lost part of the COIN stock, but FTX had been profitable for as many as 10 quarters.
Fried also stated that there will be numerous cryptocurrency exchange collapses in the future.
It can be easy to assume that bitcoin as simply trading against the US dollar, the euro, or the British pound in the Western world, and especially in the US. However, the report noted that some of the most significant trading pair activity is against major stablecoins like Binance U.S. dollar and the USD coin, as well as against fiat currencies like the Japanese yen and Korean won.
BTC/USD trades at $20k. Source: TradingView
Featured image from Shutterstock, chart from TradingView.com