Cryptocurrency market is a mess

A new study from Bitwise  has founded that majority of bitcoin trading is a hoax – 95% of spot bitcoin trading volume is faked by unregulated exchanges.

“People looked at cryptocurrency and said this market is a mess; that’s because they were looking at data that was manipulated,” says Matthew Hougan, global head of research at Bitwise.

The analysis showed that “substantially all of the volume” reported on 71 out of the 81 exchanges was wash trading, a term that describes a person simultaneously selling and buying the same stock, or bitcoin in this case, to create the appearance of activity in the market. In other words, it’s not real.

Those exchanges report an aggregated $6 billion in average daily bitcoin volume. The study finds that only $273 million of that is legitimate.

Exchanges may have an incentive to report fake volume. Bad actors may look to attract listings for new initial coin offerings, or ICOs, who want their cryptocurrency on an exchange where more trading goes on, Bitwise said. Those fees can run from $1 million to $3 million per listing, according to data from Autonomous Next.