Research indicates nearly 75% of Exchange volumes are fake

One of the popular trading research platform – TheTie reported that 75% of exchange volumes are unreal and worth questioning.

The fact that this platform makes use of data from each website’s visitors and compares that value to the reported figures adds on to its unique formula. Also, it provides something called ‘predictive sentiment analytics’ for gaining current trading insights.

Root cause for Fake Crypto volumes

It appears that over 86% of all reported Bitcoin exchange volume is suspicious while 75% of exchanges reports are almost fake. But the question comes as to why most of the exchanges are behind exaggerating their stats and how does it benefit them?

When exchanges publish their fake huge volume, traders are attracted towards it. It is something like more the volume an exchange has, the more likely you are to hit your targets. 

Higher exchange volumes imply there’s more money on an exchange. If that volume is fake, traders might experience problems when they expect to be able to do trades over a certain size.

Prominent Exchanges in the list of Suspicious Volumes

Among many such companies, exchange name like Bithumb has surfaced. As per company reports it was expected to have a monthly volume of roughly $1.2 billion based on an average visit value of $13,418. Instead, Bithumb reports over $28 billion. 

It is important to note that TheTie says these stats are “potential” indications of fake volume and furthermore the report highlights,

The weighted average trading volume per web visit for Binance, Coinbase Pro, Gemini, Poloniex, and Kraken was selected as a baseline volume per user to calculate expected volume. This amounted to $591 per web visit. BitMEX was not included because it is a futures exchange. This does not account for a mobile app or API usage to trade – web traffic is an assumption for simplicity.

On the contrary, the data from exchanges like Bittrex seems almost legit. Their expected volume was much higher than what they actually reported. Bittrex did nearly $1 billion in volume for the period studied and expected user value of $138 per visit. This concludes that chances of this exchange to have fake volume is less likely.

Also the report is charted out considering  volume per visitor to rank a particular exchange. The visitor data is gathered from a third-party (SimilarWeb). None of the exchanges fill out the top 10 per-visitor reported volume.

Bottom-line the volume reporting is very much essential for the SEC to consider the Bitcoin ETF. If every exchange in the world is considered as part of this metric, we may never reach “legitimate” status.

What do you think of this report by TheTie? Will exchange volume really matter to you? Let us know your thoughts in the comment section below.