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More than half of all Bitcoin transactions are fake

A new Forbes analysis of 157 cryptocurrency exchanges found that 51% of daily reported bitcoin trading volume may be false.

W In the emerging and volatile cryptocurrency market, there are no less than 10,000 tokens, Bitcoin is the great-grandfather, blue chip, 40% of $1 trillion in outstanding crypto assets. Bitcoin is the gateway drug to cryptocurrencies. An estimated 46 million adult Americans already own it, according to the New York Digital Investment Group, and a growing number of institutional investors and companies are showing interest in emerging alternative assets.

But can you trust your cryptocurrency exchange or electronic brokerage report on the most important digital currency transactions?

One of the most common criticisms of Bitcoin is widespread wash trading (a type of fake volume) and poor exchange monitoring. The CFTC defines a false trade as “conducting or purporting to trade to show that a sale or purchase has been made, but that does not create market risk or alter the trader’s market position.” The reason some traders conduct wash trades is to inflate an asset trading volume to show the appearance of rising popularity. In some cases, trading bots performed wash trades of these tokens, increasing volume, while insiders intensified activity with bullish rhetoric, pushing prices higher, effectively a pump-and-dump scheme. Wash trading also benefits exchanges because it makes it appear that they have more volume than they actually do, potentially encouraging more legitimate trading.

  • There is no universally accepted method of calculating Bitcoin’s daily trading volume, even among the most reputable research firms in the industry. For example, at the time of writing, CoinMarketCap rates Bitcoin’s latest 24-hour trade at $32 billion, CoinGecko at $27 billion, Nomics at $57 billion, and Messari at $5 billion.

    Adding to the challenge are ongoing concerns about the solvency of cryptocurrency exchanges, highlighted by the public failures of Voyager and Celsius. In an exclusive interview with Forbes in late June, FTX CEO Sam Bankman-Fried commented that there are many more exchanges going bust .

    A major effect of the lack of confidence in its underlying market was the SEC’s refusal to approve a spot Bitcoin ETF.

    Unfortunately for Bitcoin ETF hopefuls, many of these fears and criticisms are justified. As part of a Forbes study of the crypto ecosystem using 2021 data, we conducted a survey of the 60 best exchanges in March ranked. Recently, we have taken a deeper look at the Bitcoin exchange market to answer some pressing questions:

    1. Where is Bitcoin traded?
    2. How many bitcoins are traded every day?
    3. How is Bitcoin traded?

    Our research assesses global 157 cryptocurrency exchanges. Here are our key findings:

  • Over half of the reports The number of transactions may be fake or uneconomical. Forbes estimated that on June 14, the industry’s global daily bitcoin trading volume was $128 billion. This is 51% less than the $262 billion in self-reported transaction volumes combined from multiple sources.
  • The world’s largest stablecoin, Tether, continues to dominate the crypto trading economy, especially with Bitcoin transactions. Despite questions about its reserves, its current market cap is $68 billion.
  • Among these companies, 21 cryptocurrencies in terms of Bitcoin activity Daily trading activity on the exchanges generated $1 billion or more, while the next 33 exchanges had volumes between $200 million and $999 million for all contract types, spot, futures, and perpetual contracts. Perpetual futures, also known as perpetual swaps, are futures contracts that do not require investors to roll over. Binance is the clear leader with 27% market share, followed by FTX. Looking only at spot bitcoin, the top spots are Binance, FTX, and OKX. Chicago-based CME Group is the market leader in bitcoin futures trading.
  • The biggest problem areas regarding fake volumes are those that boast high volumes but operate Companies with little or no regulation, which will make their data more credible, especially Binance, MEXC Global and Bybit. Overall, less regulated exchanges accounted for about $89 billion of real trading volume in our study (they claimed $217 billion).
  • The creation of new trading assets and products such as stablecoins and perpetual futures has increased the need to regulate crypto markets Complexity of State Authorities. Major U.S. exchanges rarely use these instruments or contracts in any transaction. However, offshore exchanges use them heavily as a way to synthesize USD liquidity on their platforms (they don’t have access to U.S. bank accounts).
  • In the western world, especially in the US, it is easy to think that bitcoin is only associated with the dollar or euro and GBP to trade. But some of the largest trading pair activity occurred in fiat currencies like the Japanese yen and South Korean won, as well as major stablecoins like Binance USD and USD Coin.
  • 573 million people visit cryptocurrency trading websites every month.
  • We hope this report builds on other figures like Bitwise Building on the significant work done by asset researchers, Bitwise estimated in a March 2019 white paper that 95% of Bitcoin trading volume on CoinMarketCap is fake and/or uneconomical.

    our way

    Forbes uses quantitative and qualitative analysis to adjust the volume reported by exchanges. Unlike other methods of testing (and potentially deceiving) transactional data, Forbes assesses a company’s credibility by evaluating no fewer than five datasets that collectively inspire or undermine confidence in a company’s self-reported data . Data comes from four crypto media companies, CoinMarketCap, CoinGecko, Nomics, and Messari, as well as multiple exchanges and two other third-party data providers.

    We apply volume discounts based on a proprietary method that relies on 10 factors such as the exchange’s local regulator (if any) and exchange-based Transaction volume metrics for web traffic, and estimated workforce size. We also use the quantity and quality of crypto licenses as a proxy to measure the regulatory and trade oversight sophistication of each crypto exchange. If a company demonstrates a commitment to transparency by conducting a Proof of Token Reserve or participating in a Forbes survey of cryptocurrency exchanges, it qualifies for “transparency credits,” reducing any discounts that may apply.

    Many of these factors also appear in Forbes’ cryptocurrency exchange ranking formula. We divide them into three categories:

    The first group : On June 14th, 48 cryptocurrency exchanges with 0-25% discount on all markets (spot, derivatives and futures) generated $39 billion in real bitcoin trading activity.

    Group 2: 73 exchanges with volume discounts ranging from 26% to 79% generated $81 billion in trades Activity (compared to $158 billion claimed)

    Group 3: The remaining 36 companies were penalized with a high discount rate (80-99%) and were in the $59 billion in claims $7.7 billion in transactions.

    Forbes Discount Rate – June 2022

    Cryptocurrency exchange group by discounted rate Exchange and Forbes Volume by Group, June 2022

    Summary Charts and Tables

    Despite the global nature of crypto, spot Bitcoin trading activity is centered on relatively few currency pairs and stablecoins. The largest is the stablecoin USDT, followed by the US dollar. The next largest fiat assets are the Japanese yen and the Korean won.

    Forbes Real Bitcoin Trading Volume Daily Bitcoin Actual Volume (USD Million), Jun 14, 2022, 157 cryptocurrency exchanges totaling $128 billion

    BTC-US DOLLAR daily trading volume

    Group 1 exchanges, many of which are located in the US, provide $24.3 billion in USD-BTC liquidity per day and Group 2 exchanges add $17.3 billion. The prominence of Group 1 exchanges as the primary source of BTC-USD occurs in spot, perpetual and futures contracts. CME Group is the world’s leading provider of Bitcoin futures, with USD 2.1 billion USD/BTC futures change hands every day. At least 27 cryptocurrency exchanges (12 in Group 1) have more than $5 million in daily BTC-USD liquidity.

    Bitcoin-United States Dollar (USD) Trading Activity

    Crypto Exchange Group Actual Daily Trading Volume (USD Million), June 14, 2022 BTC – US TETHER Daily Volume

    Bitcoin-Tether (BTC-USDT) Its daily trading volume was $71.4 billion, 57% higher than BTC-USD, with 79% from group 2 crypto exchanges and 5% from group 3. A total of 77 exchanges — 44 in Group 2 and 12 in Group 1 — had daily Bitcoin-Tether trading volumes in excess of $5 million. Tether is prominent in the spot and perpetual futures markets, less so in the regulated futures industry, and largely non-existent outside the US

    Bitcoin-TETHER (USDT) Trading Activity

    June 14th, Cryptocurrency Trading Actual Daily Trading Volume of the Exchange Group (USD million), 2022

    BTC – USD Coin Daily Volume

    USD Coin (USDC) is gaining adoption in the stablecoin space. Bitcoin-USDC has a daily liquidity of $2.15 billion, with groups 1 and 2 accounting for 39% and 60%, respectively. An interesting observation is that Group 2 exchanges actively use USDC in the spot Bitcoin market, while Group 1 exchanges use perpetual contracts. This different use may suggest that Group 2 exchanges may be open to supporting the idea of ​​an alternative to Tether’s dominance in the stablecoin market.

    Both USDT and Binance USD (BUSD) trade higher than USDC, but the latter now has 26 cryptocurrency exchanges (the 17) with a daily trading volume of $5 million or more, while there are 77 exchanges for USDT and 5 for BUSD. If Tether’s position starts to wane, USDC may be the stablecoin most likely to win.

    Bitcoin – USD Coin (USDC) Trading Activity

    Daily Actual Trading Volume of Cryptocurrency Exchange Group on June 14, 2022 (Millions Dollar)

    Cryptocurrency trading with real volume

    TOP – 10 total real bitcoin transactions CRYPTOCURRENCY TRANSACTION June 14, 2022, Leading Company’s daily real bitcoin trading volume (millions of dollars)

    Exchange Group Bitcoin Trading Volume

    Top 10 Group 1 Cryptocurrency Exchanges by volume nges from around the world, including three from the US (CME Group, Coinbase, Kraken), one from Singapore (, one from Europe (LMAX Digital), four from financial offshore hubs (FTX, OKX,, BitMEX) and one from Central America (Deribit).

  • Among Group 1 companies, FTX is the largest and growing rapidly. It wasn’t until mid-2021 that institutional money propelled FTX’s operations from a mid-sized unregulated exchange focused on offshore crypto derivatives to a global group of exchanges that are now regulated in the U.S., Japan, Europe and elsewhere. In addition to derivatives, FTX also trades crypto spot, tokenized stocks, and more recently equities.

  • The first group of cryptocurrency exchanges Daily real bitcoin trading volume on June 14, 2022, in ten Billions of dollars; Source: Forbes

    Group 2 cryptocurrency exchanges tend to be larger and have a wide variety of products. They are primarily focused on growth and tend to be much less interested in being regulated where they operate. They also often lack effective ways to track and block wash trades. Binance is by far the largest cryptocurrency exchange in Group 2 with $34.2 billion in daily trading volume, followed by Bybit with $8.9 billion. Most of these exchanges are located in offshore havens such as the Seychelles and the British Virgin Islands.

    Group 2 Cryptocurrency Exchanges Daily real bitcoin transaction volume in billions of dollars as of June 14, 2022; Source: Forbes

    Group 3 consists of 36 crypto exchanges which, with few exceptions, are unregulated and small. Their huge self-reported volume and minimal visitor numbers make one wonder if a limited audience can really generate so much transactional activity. A case in point is BitCoke, which CoinMarketCap believes is a Hong Kong-based Cayman Islands exchange that is said to generate $14 billion in revenue per day — mostly from BTC-USDT perpetual contracts. However, SimilarWeb indicates that the exchange’s domain name receives fewer than 10,000 monthly visitors, 53% of whom are from Argentina. The volume-to-flow discrepancy combined with a lack of regulatory credentials led Forbes to discount the company’s volume by 95% to $702 million.

    Monthly visits to cryptocurrency exchanges in April 2022 Visits in millions by group – excluding four exchanges (Binance, Coinbase, Bybit, FTX) with over 20 million visits

    Major Exchange Bitcoin Pairs

    As mentioned above, BTC/USD and BTC/USDT is by far the largest Bitcoin spot pair, but there are a few other pairs worth mentioning. This is followed by BTC-KWR, BTC-JPY, BTC-USDC and BTC-EUR. An exchange’s decision to offer the underlying asset via Bitcoin, especially when it comes to fiat currency, often boils down to the local fiat currency used by the exchange’s customer base. Every company that trades Bitcoin against the Korean won or Japanese yen is based in South Korea or Japan, respectively. USDC, with its blockchain-based DNA, crosses borders more easily. Readers may note that Kraken, Binance or Coinbase are not based in Europe, although they each have a series of licenses to operate in certain countries. They all offer euro trading as a way to attract new users, but unlike exchanges in South Korea or Japan, the euro is not their primary trading base.

    Top Cryptocurrency Exchanges – Select Spot Bitcoin Pairs Spot Bitcoin Forbes True June 14, 2022

    However, while 8 Pairs make up the bulk of Bitcoin’s volume, but there are dozens of other varieties traded on humble exchanges that are not counted even in our current study. For example, it is difficult to find BTC-NGN (Nigerian Naira) volumes traded in Nigeria because crypto data firms like Nomics, CoinMarketCap, and CoinGecko typically do not track it. One can safely assume that local cryptocurrency exchanges not widely known outside Nigeria capture most of the BTC-NGN liquidity, which may be true for many other exchanges operating in emerging markets.

    Largest Spot Bitcoin Cryptocurrency Exchange Forbes Actual Bitcoin Trading Volume ($M) June 14, 2022

    These observations are also largely true for perpetual futures. However, the Korean won and Japanese yen do not appear to have gained significant market share in this space.

    Largest Bitcoin Perpetual Cryptocurrency Exchange June 14, 2022 Forbes’ Bitcoin Real Trading Volume

    Finally, for traditional futures markets such as those that offer regular monthly expiry , the only two pairs that seem to matter are BTC-USD and BTC-USDT.

    Largest Bitcoin Futures Cryptocurrency Exchange

    June 14, 2022 Bitcoin by Forbes Real Trading Volume (Million Dollars)

    Key Points

    Forbes Real Volume Research for Crypto Investors and The industry revealed some key insights.

    Bitcoin may be just the beginning of the problem. If the reported Bitcoin volume is the most regulated and most closely watched crypto asset in the world, then the Bitcoin volume is not credible , then indicators for smaller assets should be taken with larger grains of salt. At its best, trading volume is one of the most measurable indicators of investor interest, but it can easily be manipulated to convince novice investors that it’s in much more demand than it actually is.

    Binance is still 800 pounds in the room elephant. Even after the 45% volume discount, Binance still generates the equivalent of 27.3% of all “real” volume. No other cryptocurrency exchange can match its market power, and that has been the case for the past two years. That said, while Binance has been saying all the right things about working with regulators — it has started getting licenses around the world and has pledged to announce a global headquarters — questions remain about its operational controls. Unless regulators are comfortable with Binance’s legitimacy, it’s hard to imagine a spot ETF getting approved anytime soon.

    Tether is still “too big to fail” – currently: This research raises more questions about the true use and value of the two largest stablecoins, USDT and BUSD. Say what you think about Tether, people do too, it’s largely found product-market fit. But that’s the exact question on the minds of many so-called Tether Truthers who don’t believe that $68 billion is actually backed by reserves. It’s hard to imagine what would happen to the market if traders stopped trusting Tether — to be fair, there’s little evidence that’s happening — and no competitor would want to replace it.

    Future Research Areas

    The role of stablecoins in market manipulation. We have not seen any evidence that transactions based on Tether are more prone to fraud than other assets. However, this area deserves further study, especially if Tether starts to deviate from its $1 peg again or other algorithmic stablecoins start to gain traction in large spot market trades. An ostensibly stable underlying asset with higher-than-expected volatility always presents legitimate arbitrage opportunities and opportunities for fraud.

    The potential of perpetual futures is being manipulated. Through our research, including first-person interviews with direct market participants, we have not seen any evidence that perpetual contracts are more likely to be Shuffle trading and other forms of manipulation beyond traditional futures or spot contracts. However, given the relative novelty of the product (it was created in 2016), and its dominance in cryptocurrency trading, it’s well worth digging into.

    The future of DEXS in market manipulation. This report does not focus on decentralized exchanges (DEXs), largely because they are not the major players in Bitcoin trading. Conversely, when it comes to spot markets, most major players have differentiated themselves from the major centralized exchanges, focusing on novel ways to provide liquidity to many traditional exchanges for long-tail assets that are not financially worthwhile to offer. sex. That being said, the DEX’s market share has slowly climbed to that of spot — and even for a few days, the largest DEX, Uniswap, surpassed Coinbase in trading volume.

    Forbes Methodology

    Forbes The method of discounting Bitcoin transaction volume follows a series of steps.

    Regulation. We determine which crypto license each exchange has and which regulator it comes from, and use this as a measure of its sophistication and deterrent wash trading Proxy of intent and publish fake volumes.

    Third party input. We considered the work of selected third parties, such as volume data from CoinMarketCap, CoinGecko, Nomics, and Messari. Messari’s volume statistics are less extensive and have less volume than its peers, but it has its own true volume calculations. Forbes has tracked how Messari applied volume discounts of 40% to 65% to Binance volume in recent months, compared to the average reported by CoinMarketCap, CoinGecko and Nomics at the time. Messari is also discounting FTX’s trading volume by less than 20%, and Kraken’s trading volume by 99%. Regarding the latter, Forbes disagrees with the idea of ​​giving a deep discount to the company of one of the most regulated cryptocurrency exchanges in the world. However, most exchanges analyzed by Messari’s actual volume do not have any kind of volume discounts.

    Network traffic. Forbes uses third-party data from web analytics firm SimilarWeb to drastically reduce the number of companies claiming high traffic without sufficient encryption licenses and web traffic to generate such transaction volume.

  • Forbes interview. Forbes conducted dozens of interviews with executives at major cryptocurrency exchanges to supplement quantitative information on company profiles.

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