As much as 98% of Ethereum (ETH) trading volumes on major cryptocurrency exchanges are artificially generated. This is stated in a study by the analytics firm Blockchain Research Lab (BRL).
BRL Working Paper No 13 Wash Trading at Cryptocurrency Exchanges by ForkLog on Scribd
Analysts studied a number of trading venues for wash trading. Exchanges were divided into three groups: those with no signs of inflated volumes, those with dubious indicators, and those with direct evidence of such practices.
BRL relied on metrics such as stated trading volumes, exchange balances, wallet counts, and website traffic on exchanges. The study accounted for volumes of BTC, ETH, XRP, USDT, and USD.
The average daily trading volume in the BTC/USD pair among the representatives of the first group was $42 million. In the mixed group it rose to $170 million, and among exchanges with obvious signs of inflated volumes — to $490 million.
The ratio of trading volumes to page views in the third group was 138 times higher than in the first.
The ETH trading-volume-to-exchange-balance ratio for exchanges in the two latter categories was also substantially higher than for platforms with no wash-trading signs.
Based on these data, the analysts estimated the expected trading volumes for the two latter categories. In the mixed group, this figure was roughly 50% below the reported volumes.
BRL notes separately that among the exchanges in the third category 96-98% of ETH trading volumes are highly suspicious. Based on token-balance data, the analysts also concluded that 72-97% of volumes across three exchanges raise serious doubts.
Earlier, Coin Metrics researchers developed an original approach to assessing the reliability of exchange-volume data. The methodology showed that data from just over a dozen trading venues deserve trust.
Read the detailed analysis at the link below.
Which Bitcoin exchanges truly deserve trust — a test of resilience by Coin Metrics
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