There is no doubt that with the development of the cryptocurrency market, many new users have become traders. As a result, the daily volume of transactions in certain cryptocurrencies, especially bitcoin (BTC), is constantly growing. However, can we really believe the figures that are put forward by digital asset exchanges? As surprising as it may seem, the answer is no according to a study carried out by Forbes.
The method of wash trading to inflate the numbers
Of all the cryptocurrencies that exist, bitcoin (BTC) is the one that is the most known and the most used. This is not surprising, since it is the first crypto to have been invented. In addition, it represents 40% of the $1,000 billion in digital assets in circulation. Bitcoin (BTC) is therefore very popular. Moreover, according to the New York Digital Investment Group, 46 million American adults already have it.
Regularly, traders as well as crypto exchanges publish data about the volumes of transactions made with digital assets. However, according to a study conducted by Forbes, these data are not necessarily trustworthy. The magazine puts forward two reasons: the wash trading (1) and the weak monitoring of crypto transactions (2).
According to the US Commodity Futures Trading Commission, wash trading is defined as “the act of concluding, or pretending to conclude, transactions to give the impression that purchases and sales have been made”. This method allows traders to give the impression that an asset has a high popularity, by inflating the volume of transactions. But in reality, the magazine emphasizes, “in some cases, these transactions are executed by robots without using crypto”. With wash trading, digital asset exchanges also give the impression of having more volume than they really have.
The conclusions of the study
At the moment, there is still no universally accepted method for determining the daily volume of bitcoins (BTC). As a result, even the data published by the most reputable research companies are not always reliable. For all these reasons, the Security and Exchange Commission continues to display a lack of confidence with regard to the crypto markets.
Unfortunately, this lack of confidence seems to be justified. Indeed, by taking an interest in the subject and conducting its study with 157 scholarships, Forbes discovered that :
- More than half of all reported transaction volumes are likely to be false ;
- Despite questions about its reserves, tether (USDT) has a market capitalization of $68 billion and remains a dominant actor on the stablecoin market ;
- The biggest concerns about fake trading volumes come from big companies like Binance, MEXC Global and Bybit, which operate with little or no regulatory oversight.
In a recent study carried out by Forbes, we learn that some of the advanced data for the transaction volumes of bitcoin (BTC) and other cryptocurrencies are not always reliable. Cryptocurrency traders and exchanges inflate the numbers to give the impression of having large volumes.
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Behind the generic signature “Editorial CT” are young journalists and authors with special profiles who wish to remain anonymous because they are involved in the ecosystem with certain obligations.