While most of us might be thinking that the crypto market is moving towards attaining more maturity, the issue of fake trading volumes continues to persist. Some of the existing crypto exchanges still openly continue with the shady practices of wash trading and faking trading volumes.
Last month in March 2019 a Bitwise report suggested that nearly 95% of the Bitcoin trading volume is fake. Bitcoin, being the world’s largest cryptocurrency, such a huge amount of fake trading volume is really concerning. However, Bitcoin is not the only digital currency facing this issue. The latest report from CCN suggests that XRP is also the victim of fake trading volumes.
According to a CCN report, over 90% of XRP trading volumes is fake. According to the data on CoinMarketCap, XRP which is the third-largest cryptocurrency by market cap has a 24-hour trading volume of $810 million, at the press time.
But data from another aggregator called OpenMarketCap makes some eye-popping revelations. Note, OpenMarketCap only aggregates data from exchanges that don’t allow wash trading and similar other shady practices. The aggregator shows XRP’s 24-hour trading volumes to be just at $45 million.
Although, we at CoinSpeaker don’t vouch entirely on either of the data. However, the interesting here is despite considering that over 90% of trading volumes are fake, the remaining 9-10% are not. As per the charts, crypto market trading volumes topped at $52 billion in the last seven days. Considering that 10% volumes are genuine, even $5 billion is a huge figure.
Other Popular Altcoins All Face Fake Volumes Menace
The report for XRP is indeed eye-opening. However, it’s not the only altcoin facing the fake volume issue. Other popular altcoins like Litecoin (LTC), EOS and Bitcoin Cash (BCH) are facing similar menace.
For e.g. Litecoin has only $106 million real volume against the reported $2.9 billion. EOS has $121 million actual volume against that reported as $2.9 billion. Similarly, Bitcoin Cash has $146 million real volume against that reported as $1.6 billion.
Founder of DIRT Protocol, Yin Wu recently published a blog stating the reason behind crypto exchanges reporting fake volumes. Wu wrote:
“Exchanges are incentivized to report false numbers to climb price tracker listings (and thus be featured more prominently to users.”
Wu also states that “A 95% drop in trading volume means the market for most alcoins is extremely illiquid / non-existent”.
OpenMarketCap is a new crypto tracker that calculates price and volume using data from the 10 trusted exchanges on the @BitwiseInvest report.
A 95% drop in trading volume means the market for most alts is extremely illiquid / non-existent: https://t.co/J6yLb5VxAx
— Yin Yin Wu (@yinyinwu) March 26, 2019
Yin Wu also told CCN that it is important for users to get a legitimate source of data that they can trust and use. Thus, it is important for users to trust a legitimate platform like OpenMarketCap.