50% Of Total Bitcoins Is Subjected to Wash Trading, Report Suggests

Wash trading has always been a serious pressure point for the cryptocurrency markets. It might be slightly expected in such an unregulated market, however, the situation appears to get better according to a recent report. Since the beginning of the year, the percentage of wash trading among the top exchanges has dropped drastically with almost 36%, while Bitcoin’s wash trading volume is around 50%.

What is Wash Trading?

A single coin can be bought and sold with the sole purpose of providing false and misleading information to the market. This process is referred to as wash trading. One entity can serve as both the buyer and the seller of a specific coin (or any asset), pumping the volume and attracting other traders to follow the price movement. However, there’s the possibility of a trader colluding with a broker and executing the buys and sells as well.

This form of market manipulation is illegal in numerous countries, including the U.S. It’s worth noting that the report shows the U.S. and Japan as the two countries with the cleanest exchanges as both countries have severe regulatory standards against such practices.

Cryptocurrencies Affected by Wash Trading

Bitcoin’s wash trading volume is around 50% and it’s the lowest among the top 5 cryptocurrencies. Bitcoin Cash has the largest percentage of 82. Ethereum and Litecoin follow with 75% and 74%, and Ripple is at 55%.

The numbers show that the most heavily impacted tokens in top-25 are Ethereum Classic, Dash, and Monero with over 80% of their volumes being wash traded.

As far as stablecoins go, USDT remains the most used one. The real trading volumes is at 94%, even after we exclude 67% of wash trading. USDC has the lowest wash trading volume of 7% and it has reached 2nd place as per the actual volume. DAI has 30% wash trading volume, PAX is next with 13.7% and TUSD follows with a bit under 12%.

Exchanges and Wash Trading

The most heavily-impacted cryptocurrency exchanges are Bibox and OKEs. The wash trading volume coming from them is above 75%. However, it’s worth mentioning that even after we exclude the wash trading activities, their real volume still places them in the Top-20 exchanges.

The cleanest exchanges, on the other hand, are Kraken, Coinbase, Upbit, and Poloniex.

Gemini and Binance display a similar number of less than 10% of their volumes being wash traded. A previous report showed that BTC/USDT on Binance has a real volume of 100%.

In any case, wash trading remains a serious challenge for the space. In fact, it’s one of the main issues that have to be solved in order for the US Securities and Exchange Commission (SEC) to approve a Bitcoin ETF.

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