Much of Crypto Data Is ‘Fake’ – Groundbreaking Study Issues Disastrous Price Warning for Bitcoin, Ethereum, BNB, XRP, Solana, Cardano, Shiba Inu and Dogecoin Crash

The crypto hemorrhage continues.

Over the past week, the price of bitcoin has lost 6.2% of its value, reaching a low of just over $20,000. Altcoins are also bleeding. Ethereum price fell 4.1%, Cardano
ADA
is down 3.7%, Solana
FLOOR
fell just under 9%. And XRP
XRP
BNB
BNB
dogecoin and shiba inu are down 8.3%, 5.9%, 9.6%, 8.4%.

Meanwhile, some crypto numbers you see every day aren’t as real as you might think.

The accuracy of crypto data has long been a concern due to the lack of standardized reporting and regulations, but there was not much information about its seriousness. Well, until now.

Javier Pax, director of data and analytics for Forbes’ digital assets arm, reviewed 157 crypto exchanges and found an extreme discrepancy between reported and actual bitcoin trading data.

Long story short, his analysis estimated that more than half of all bitcoin exchanges are either wash the trade or just wrong:

“More than half of all reported transaction volumes are likely fake or uneconomical. Forbes estimates that the global daily bitcoin volume for the industry was $128 billion on June 14. That’s 51% less than the $262 billion one would get by taking the sum of self-reported volume from multiple sources.

What’s going on here?

Zoom out

There are two culprits to blame for this glaring discrepancy in crypto data.

The first and most obvious are unregulated exchanges that directly falsify trading volume data.

This has to do with the fact that many crypto websites rank exchanges based on trading volume. So, improving volume numbers here and there is a tempting shortcut that can instantly give them more exposure and attract more customers.

This malpractice was brought to light in 2019 when Bitwise Asset Management revealed that 95% of trading volumes reported by exchanges on CoinMarketCap, the world’s #1 crypto data website, were fake.

And the smaller the exchange, the more drastic the massage of the figure is usually. Pax’s survey found that the biggest data discrepancies were on lesser-known and smaller exchanges. Their actual volumes turned out, get this, 80-99% lower than reported. Which means that these exchanges simulate almost all of their bitcoin trading.

The second culprit is whale investors who immediately open and then close their positions for no economic reason. In industry jargon, this is called wash the trade. This is an illegal practice that high net worth traders exploit to create a false impression of demand and manipulate the markets, which can be extremely effective in pump and dump schemes.

Look forward

Pax’s analysis only covers bitcoin. So on the one hand, that doesn’t tell us much about the overall crypto market. On the other, it does.

If there is so much fake data surrounding such a reputable cryptocurrency, you don’t need much imagination to realize how much of the data is made up of smaller cryptocurrencies; data that many investors take for granted.

Take-out?

Until the crypto market is regulated, take all crypto data with a large grain of salt. Because, apparently, the crypto you proudly hold or the exchange you have entrusted to it can be as liquid as a rock.

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