Crypto-currency exchanges, like most companies, are not always upfront about their operations. Many try to maintain a level of transparency to retain their appeal and credibility with their customer base, but there are certain items they don’t disclose.
We’re going to look at some of the secret problems behind the closed doors of cryptocurrency exchanges.
Fake Trading Volumes
The trading volume of the biggest cryptocurrency exchanges is up for discussion, as numerous research firms reports show that there are many contradictions on the market.
We looked at internet traffic on the top 100 crypto exchanges websites and found that 75 percent of the trading volumes published by exchanges were more than double that the actual numbers. About 90 per cent of the volume of the exchanges was uncertain.
How Crypto Exchanges Manipulate Their Trading Volume
Trading volume manipulation across exchanges has also been a problem for traders and regulators alike. There are a number of actions that can be introduced to boost sales artificially, which in effect makes it look like there is a desire for a certain coin when there are no actual buyers on the market. Around 67 per cent and 95 per cent of Bitcoin’s trading volume is faked by wash trading, depending on the source.
No matter how you look at it, the trade in wash is a form of manipulation of the market. This includes one party (traders, brokers, or the exchange) only buying and selling the same commodity in order to manipulate market prices in their favour. If on a crypto exchange there are repeated transactions and sales, which looks like they were made in an automated manner and have exactly the same number, these orders are simply washing out each other.
Although traders and brokers have traditionally partnered to post fake trades, there are plenty of cryptocurrency exchanges trading on their own site to improve their trading volume numbers.
There are numerous reports from late 2018 and early 2019 suggesting that this practice occurred at many exchanges.
Even though in the world of crypto exchanges there are still many unknown shady things going on, the industry is constantly evolving to uncover those who are trying to exploit or manipulate the market.
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