Two of the most defining traits of current crypto market is its volatility and manipulability. One of the most skewed and distorted metrics is trading volume on exchanges. There are vested interests of both the exchange and crypto project to wash trade and artificially inflate the trading numbers and project a picture of a legit and liquid platform and project.
New research presented to the SEC by Bitwise Asset Management claims 95% of reported BTC spot volume is fake. According to Bitwise, only 10 exchanges have actual volume… but it’s not all bad news for the bitcoin market.
Claims of wash trading and fake volumes are nothing new. Groups like the Blockchain Transparency Institute have been publishing ever more detailed reports on the issue. But the suggestion that 95% of the volume is fake marks a new high (or low) point. The main reason for an exchange to fake volume is to inflate the listing fees it can charge.
This report prompted the cryptocurrency data firm Messari to add couple of new metrics to their already powerful database that tracks all kinds of data points relevant to crypto market. The new metric added is the so called “Real 10” 24h volume.
According to Messari, “Real 10” 24h volume metric is is the trading over the last 24hrs from the 10 exchanges identified by Bitwise Investments as well-functioning markets.
As of early 2019, it is suspected that the majority of reported global trade volume is due to wash-trading or other practices that are not representative of well-functioning markets. This ‘Real 10 Volume’ metric omits volume from exchanges that don’t show consistent patterns of well functioning markets. The 10 exchanges meeting that criteria, as identified by Bitwise Investments are: Binance, Kraken, Bitfinex, Coinbase, Bitstamp, BitFlyer, Gemini, itBit, Bittrex, and Poloniex.
Discrepancies between the reported volume across the whole slew of exchanges and this new, more meticulous metric are huge for some projects, but less so for some other.
Of the large cap projects, most volume overstatement has Dash, whose reported volume is 100x bigger than the one recorded on the 10 legit exchanges – real 10 is $2,187,989 while the reported volume is a massive $227,716,607.
Other well known projects that rank high in this unflattering table are ETC, Doge, EOS and even bitcoin.
On the other side, RVN, BAT, BNB and ENJ have one thing in common: aside of being one set of the top performing coins in the recent months, they also appear to have majority of their volume traded on the well-functioning markets.
BAT’s volume is only 4x bigger than the real one, whereas RVN, BNB and ENJ are even better with only 2x disparity of the two metrics.