Wash Trading Dominates Bitcoin Volume, What Does This Mean For Price?


Daily Bitcoin trading volumes reach billions of dollars each day, with hundreds of thousands of transactions executed daily. It is one of the reasons why Bitcoin attracts most investors, given the large trading volume and good depth on all exchanges. However, some on-chain analysts have been diving into the blockchain to explore the daily volume of BTC, and the results of this study are alarming.

More than 50% imaginary volume

Mostly, in the current market, there is always some amount of volume to actually fake digital assets. These fake trading volumes are meant to make digital assets look better than they really are to get other investors to invest in them. Small cap cryptocurrencies are usually pretty much to blame for this, but it seems that the largest cryptocurrency by market cap is not left out of this.

Bankless Times implemented a study In the daily bitcoin volume for 2022 and found that the majority of the volume was actually fake. The study showed that 51% of bitcoin volume across various exchanges was actually the result of trading laundering.

Bitcoin price chart from TradingView.com

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

For those who don’t know, the process of trading an asset is illegal as it creates a false narrative about that asset to make investors put their money into it. In this way, they are trapped, and laundry merchants come out with multi-million dollar profits, depending on the size of the scheme.

The study revealed that stablecoins were actually contributing significantly to this trading volume. This means digital assets are seeing a fake $10-15 billion volume across exchanges, which raises concerns about how this will affect cryptocurrency.

Impact on the price of bitcoin

To the unsuspecting eye, there may be no manipulation going on when it comes to the price of bitcoin, but this report from Bankless Times actually shows that the digital asset is largely manipulated. Laundering trading can easily affect the price of a digital asset by making it look like a profitable investment.

So let’s say Bitcoin is traded across multiple exchanges; It deceives investors into believing that there is a great demand for the asset, which leads them to buy it. Thus raising the digital assets of the cryptocurrency in the process.

With so much fake trading volume, it begs the question of whether the current BTC price is actually accurate. A true volume of less than 50% of the reported volumes would put the value of the digital asset at around $12,000, if true.

Featured image from Forbes, chart from TradingView.com

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