How do you estimate the real trading volume of a cryptocurrency exchange? If you’re thinking – ‘Check the volume on CoinMarketCap’, think again.
Determining the real trading volume of a cryptocurrency exchange has proved to be a tougher problem than anticipated, and CoinMarketCap and many other such reporting websites are not able to identify the real volume correctly. After a research report from Bitwise that blew the lid on real exchange volumes last year by claiming upto 95% volumes are fake, a new report from FTX global partnered with Alameda Research now shows that many exchanges are still faking around 68% of their reported volume.
In a blog post, FTX has shared findings of their ‘Crypto Wash Trading’ research which states that 68.6% of crypto trading volume on indexes like CoinMarketCap (CMC) are fake.
The methodology used by FTX involved putting crypto exchanges to the test against parameters like manual inspection of trading data, comparison between order book depth and overall volume, to name a few.
While 68% of overall trading volume turned out to be fake, leading exchanges like OKEx reported most accurate trading volumes.
It’s no surprise that while World’s largest exchanges like OKEx remained at the top with the least fraudulent volume, smaller exchanges reported the highest erroneous trading numbers. Higher volumes mean better ranking on CoinMarketCap which allows them to demand greater listing fees from coins and attract new customers.
What do you feel about these findings? Which exchange do you trust the most. Let us discuss on our telegram group.