30% of the CoinMarketCap Top 100 Are Wash Trading 3X Their Stated Volume
According to the Blockchain Transparency Institute’s (BTI) August 2018 report, volume and adjusted volume metrics published by aggregators such as CoinMaketCap do not reflect the true volumes of trade on cryptocurrency exchanges. What lies behind these dubious figures is the fact that many of the reporting exchanges engage in wash trading. As per the report, over 70% of exchanges in the CoinMarketCap top 100 list are likely engaging in wash trading by at least 3x their stated volume.
A wash trade is a form of market manipulation in which an investor simultaneously sells and buys the same financial instruments to create misleading, artificial activity in the marketplace. The technique is often used by market players and cryptocurrency exchanges seeking to boost their trading volume metrics artificially. Thus, the volume reflected by exchanges who indulge in wash trades, isn’t entirely market-driven. It also makes the rankings that the aggregators provide on the basis of exchange-sourced information inaccurate and unreliable. The CoinMarketCap Top 100 is no exception.
7 of the Top 10 Exchanges Engage in Excessive Wash Trading
As a solution, BTI has determined a more accurate exchange rankings list. BTI rankings are compiled from available order book liquidity and unique daily visitor counts for the various exchanges. Accordingly, the new system should be fairly reliable. According to the BTI exchange rankings, at least 7 of the top 10 exchanges engage in excessive wash trading from 12x to over 100x their true volume.
Huobi and Okex – Biggest Offenders
The biggest offenders in the top 10 are ZB exchange and Lbank. These exchanges appears to be wash trading their volume over 390x and 4400x, respectively. Other suspect exchanges in the top 10 include Huobi and Okex which appear to be over-reporting their volumes by 12-19x, coming in at $93 million and $87 million respectively. Ribes data estimates them to be faking 80-90% of their total volumes, bringing their actual totals close to $100,000,000/24h. Bibox is another exchange that was suspected to be overstating its true trading volume by 85x.
Binance and Bitfinex – Top Rankers
Binance, with by far the largest unique visitor per day count (~280K), tops the BTI exchange rankings list. Bitfinex, which is known to be a landing spot for high dollar accounts with its $10,000 sign-up minimum, ranks 2nd with a high volume per user figure (~$17K). Geographically, Coinbase emerged as the top exchange in the USA and Bithumb as the largest exchange in South Korea.