Daily bitcoin trading volume tops billions of dollars every day, with hundreds of thousands of daily transactions being made. This is one of the reasons why Bitcoin attracts most investors with such high trading volume and good depth across all exchanges. However, some on-chain analyzers have delved into the blockchain to study daily BTC volume, and the results of that study were alarming.
More than 50% fake volume
More often than not, there is always some volume in the current market for digital assets that are actually fake. These fake trading volumes are designed to make a digital asset look better than it actually is in order to trick other investors into investing money in them. Smaller-cap altcoins tend to be to blame in large part, but it seems the largest cryptocurrency by market cap isn’t left out.
Bankless Times conducted a study of daily Bitcoin volume for 2022 and found that most of the volume was actually fake. The study showed that 51% of Bitcoin volume on various exchanges was actually due to wash trading.
BTC stays above $20,200 | Source: BTCUSD on TradingView.com
For those who don’t know, the act of wash trading an asset is illegal because it creates a false narrative about that asset in order to trick investors into investing their money in it. That way, they’re trapped, and the Wash dealers walk away with millions in profits, depending on how big the scheme is.
The study revealed that stablecoins were indeed a major contributor to this wash trading volume. This means that the digital asset has fake volume of up to $10-15 billion across exchanges, raising concerns about how this will affect the cryptocurrency.
Impact on Bitcoin price
To the unwary eye, manipulation may not exist when it comes to Bitcoin’s price, but this report from the Bankless Times actually shows that the digital asset is widely rigged. Wash trading can easily affect the price of a digital asset by making it look like a viable investment.
So let’s say bitcoin is traded across multiple exchanges; it fools investors into believing that there is high demand for the asset, prompting them to buy it. This increases the cryptocurrency digital asset in the process.
With such a large trading volume allegedly being fake, the question arises as to whether the current BTC price is actually accurate. A real-world volume less than 50% of the reported volume would value the digital asset at around $12,000 if true.
Featured image by Forbes, chart by TradingView.com
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