A recent study claiming 90 percent of crypto exchange volume is “suspect” may have understated the problem, according to Bitwise Asset Management.
Earlier this week, the cryptocurrency-focused asset manager presented the U.S. Security and Exchange Commission with results of its own study, which found that 95 percent of the $6 billion spot bitcoin trading reported by exchanges is fake.
The actual real average daily volume in bitcoin trading is closer to $270 million, according to Bitwise.
The report follows a study earlier this week that claimed 90 percent of crypto exchange volume is fake.
“The fact that a significant portion of the reported daily volume in bitcoin is demonstrably fake will be unsurprising to many in the industry,” said Matt Hougan, global head of research at Bitwise, in released comments. “Market participants have long understood, and experienced first-hand, that a substantial portion of reported volume is fake. This report is simply the first time that the data has been comprehensively assembled and analyzed to formally corroborate those anecdotal suspicions.”
Bitwise’s research was based on an analysis of the top 81 cryptocurrency exchanges by reported volume on CoinMarketCap.com. According to the study, almost all of the volume reported on 71 of the 81 exchanges is fake or wash trading.
For example, trades on CoinBene, the largest reported exchange with $470 million in average daily trading volume, have a median spread of 15 dollars. Yet trades on Coinbase Pro, with $27 million in average daily volume in bitcoin, come in with a median spread of 0.01 dollars. The researchers found no credible reason for an exchange with higher volume to report a median spread 1,500 times higher than an exchange with smaller volume.