Fake Trades on Exchanges

[mistatee2000]

I have been sceptical for some time regarding "Wash trades" going through certain exchanges and therefore distorting the actual figures for volumes on the exchanges. I realise that this is the cryptocurrency market and that nothing should surprise us, but the following report underscores my concerns

Quote

The Blockchain Transparency Institute released a research report in August which estimated that over $6 billion dollars in daily trade volume is being faked with over 67% of daily volume being wash traded.

https://www.theblockcrypto.com/2018/12/13/analysis-of-cryptocurrency-exchange-traffic-could-results-hint-at-faked-volume/

Now it could be that The Blockchain Transparency Institute is fake too - who knows?

[ObeyTheWafflehouse]

I've been trying to study the volume of the crypto markets here recently. Wash trading as you propose would be an interesting idea. In theory, if wash trading was implemented and with bots scouring the markets, when a trader and exchange intentionally drive the price one way, the bots could "run wild". This could be why we see anomalies in a specific exchange, and not across all exchanges. 

[hallwaymonitor]

First of all I don't know is The Blockchain Transparency Institute (BTI) trustworthy source. However, it is clear that most (if not all) cryptocurrency exchanges are incentivized to practice wash trading. The real question is then how much wash trading is there in general?

"Included in this report we have calculated the true volume of the CMC top 25 BTC trading pairs. Most of these pairs actual volume is under 1% of their reported volume on CMC."

In below is the article referring to the Blockchain Transparency Institute report:

https://masterthecrypto.com/crypto-exchanges-manipulating-trading-volume/?fbclid=IwAR2-UnyBQUCP7ERtJNLqCNrBEDqqoI_AKTKjHQJqrgu6dT9oT6Xk3pYLW7E

In below is the direct link to the December 2018 report by BTI:

https://www.blockchaintransparency.org/

Credit to  @Fazzyfocus

 

[ObeyTheWafflehouse]

On 12/25/2018 at 4:16 AM, hallwaymonitor said:

cryptocurrency exchanges are incentivized to practice wash trading

Yes, they most definitely are. Without regulatory oversight, these exchanges can do whatever they want (literally the Wild Wild West). However, when institutional trading becomes a bigger player in the crypto markets, this will help to drive out some of the filth (early investors/bad actors), but price swings may be more aggressive.

Rule 589 is implemented on the derivatives market to stop such wild price fluctuations. IMO these exchanges are years from having any type regulatory oversight such as the SEC or CFTC in the US, if at all.