Forbes has published its new analysis of 157 cryptocurrency exchanges, finding that probably 51% of the reported daily Bitcoin exchange volume is fake.
Forbes: more than half of Bitcoin’s reported exchange volume is fake or uneconomic
In the “Forbes Digital Asset” section, a new report was published that analyzed 157 cryptocurrency exchanges, finding that 51% of the reported daily Bitcoin trade volume is fake.
— Forbes Crypto (@ForbesCrypto) August 26, 2022
“A new Forbes analysis of 157 crypto exchanges finds that 51% of the daily bitcoin trading volume being reported is likely bogus: by @eltrade.”
Basically, taking June 14 as the reference date, Forbes estimated that the global daily Bitcoin volume for the industry was $128 billion. This is, therefore, 51% less than the $262 billion that would be obtained by adding up the self-reported volumes from multiple sources.
Not only that, according to Forbes, the most problematic areas concerning fake volumes are companies that boast large volumes but operate with little or no regulatory oversight that would make their figures more credible, notably Binance, MEXC Global, and Bybit.
Overall, the less-regulated exchanges in the Forbes study account for about $89 billion of the real volume (while $217 billion is claimed).
Forbes and the spread of wash trading on Bitcoin
A not insignificant observation that Forbes describes in its report is precisely the spread of wash trading on Bitcoin, a form of fake volume, and the lack of oversight on cryptocurrency exchanges.
Basically, some traders engage in wash trading by inflating the trading volume of an asset to give the impression that there is growing in popularity. Most of the time, performing such token trading is done by trading bots, increasing the volume, while insiders reinforce the asset with bullish comments and drive up the price in a pump-and-dump scheme.
At the same time, wash trading also becomes advantageous for cryptocurrency exchanges, as it allows them to appear with more volume than the actual one.
Forbes adds that there is no universal method to estimate the daily volume of Bitcoin and, to give the example, on the day of publication it shows how the last Bitcoin exchange in 24 hours is worth on CoinMarketCap $32 billion, CoinGecko $27 billion, Nomics $57 billion and Messari $5 billion.
Some cryptocurrency exchanges are insolvent: word from FTX’s Sam Bankman-Fried
Two months ago, also Forbes, had conducted an interview with FTX CEO Sam Bankman-Fried who reportedly explained how he thinks many cryptocurrency exchanges are insolvent, even if they hide it.
At the time, FTX had been in profit for as many as 10 quarters, while rival Coinbase was losing $432 million, also losing share of COIN stock.
With assets of as much as $20.5 billion, Fried also added that many cryptocurrency exchange failures are yet to come.