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Wash trades dominate Bitcoin trading volume, but what does this mean for the price?

Daily Bitcoin transaction volume reaches billions of dollars every day, with hundreds of thousands of transactions taking place every day. This is one of the reasons why Bitcoin attracts so many investors, given such high trading volumes and sufficient depth across all exchanges. However, some on-chain analyzers have dived into the blockchain to study his daily BTC volume, and the findings are astonishing.

Over 50% false volume

For the most part, in today’s market there will always be a certain amount of digital assets that are actually counterfeit. These fake trading volumes are meant to make digital assets look better than they really are and get other investors to put their money into them. Smaller cap altcoins are usually to blame for this, but it doesn’t seem like the cryptocurrencies with the largest market capitalization have been left out.

Bankless Times researched the daily amount of bitcoin in 2022 and found that the majority of that amount is actually fake. The study showed that 51% of Bitcoin trading volume on various exchanges was actually the result of wash trading.

BTC maintains above $20,200 | Source: BTCUSD on TradingView.com

For those who don’t know, wash trading assets is illegal. Because they create false representations about their assets and get investors to put their money into them. In this way, they are trapped and the wash trader walks away with a profit of millions of dollars, depending on the size of the scheme.

The study revealed that stablecoins are indeed contributing significantly to this wash volume. This means that digital assets can be found in fake trading volumes of up to $10 billion to $15 billion across exchanges, raising concerns about how this will affect cryptocurrencies.

Bitcoin price impact

To the unsuspecting, there may not be much manipulation going on when it comes to Bitcoin prices, but this report from Bankless Times shows that digital assets are in fact heavily manipulated. Wash trading can easily influence the price of a digital asset by making it look like a profitable investment.

So let’s say Bitcoin is wash traded on multiple exchanges. It deceives investors into believing that there is great demand for the asset, leading them to buy. This will cause cryptocurrency digital assets to rise in the process.

With such a large trading volume reportedly fake, it raises the question of whether the current BTC price is actually accurate. His actual volume, which is less than 50% of reported volume, puts the value of the digital asset at around $12,000.

Featured image from Forbes, chart from TradingView.com

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Wash trades dominate Bitcoin trading volume, but what does this mean for the price?

Source link Wash trades dominate Bitcoin trading volume, but what does this mean for the price?

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