It is accepted that many exchanges do “wash trades” to increase trade volume. Wikipedia defines a “wash trade” as:
This may be done for a number of reasons:
- to show that a cryptocurrency has a large demand
- to attract traders to the exchange.
The website messari.io/, has a "Real Volume” metric. The “Real Volume” shows the trade volume for only 10 cryptocurrency exchanges. These exchanges were selected by Bitwise Asset Management. Inc. Their statement about these exchanges is as follows:
The 10 exchanges are:
- Binance
- Bitfinex
- Bitflyer
- Bitstamp
- Bittrex
- Coinbase Pro
- itBit
- Gemini
- Kraken
- Poloniex
It is accepted that these 10 exchanges are a small quantity of the total number of exchanges where cryptocurrencies are traded, and that the “Real Volume” metric will underestimate the total global volume.
Here is “Real Volume”, “Reported Volume”, and “Volume Overstatement” for the 10 most traded cryptocurrencies for April 28th, 2020. “Volume Overstatement” is the ratio of the Reported Volume” to the “Real Volume”.
The cryptocurrency with the highest fake volume is LTC. It has a “Volume Overstatement” equal to 95.69. That shows that for the past 24 hours, 99% of the listed trade volume for LTC is not real! The cryptocurrency with the lowest fake volume is Tezos. It has a “Volume Overstatement” equal to 4.96. But its value which shows that 80% of the listed trade volume for Tezos is fake is also very high.
