7 October 2022
According to BanklessTimes.com data, more than 51% of the total Bitcoin trading volume on various crypto exchanges this year is fake amid volatile global economic conditions, and despite the continued growth in mining cryptocurrency.
Bitcoin is the leading cryptocurrency and represents 40% of the total crypto assets outstanding in the new and volatile crypto markets. The market capitalization of bitcoin is 382.25 billion.
The report claims that the majority of this fake Bitcoin volume is due to wash trading. Wash trading is illegal, where an asset is bought and sold simultaneously on the same platform to create false liquidity. It is often carried out by bots or spoofing orders.
The CEO of BanklessTimes, Jonathan Merry said, “it’s difficult to talk about cryptocurrency without talking about Bitcoin. Yet, there is a concern that a large part of the daily traded volume of Bitcoin is fake. This puts into question the legitimacy of exchanges and the reliability of data."
Tether (USDT) is also contributing to the fake volume is stablecoins. Tether pairs very well with Bitcoin and is often used to buy and sell Bitcoin on exchanges.
Faking trading volume helps to attract new customers in exchange.
Exchanges trick investors by appearing to be more popular than they actually are and investors believe that there is more activity and liquidity on their platform.
Additionally, people can also use wash trading to prop up the price of a particular asset. By buying and selling the asset simultaneously, they can create the illusion of demand and drive up the price. This can be done for personal gain or artificially inflate an asset's price before selling it.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.