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Arcane analyst: Unusually high open interest and trading volume on MEXC and Bitget raise suspicions

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Arcane analyst: Unusually high open interest and trading volume on MEXC and Bitget raise suspicions

Norwegian research firm Arcane Research analyst Vetle Lunde believes that the open interest and trading volume of the exchanges MEXC and Bitget, compared to their exchange reserves, are more suspicious than those of other exchanges.

Not Much Money, but Users Leveraging Big

Exchanges that offer derivative futures contracts typically use Open Interest and Volume as rankings on platforms like CoinMarketCap and CoinGecko. However, the size of Open Interest can be significantly amplified through users' leverage. In short, the betting amount is large, but it doesn't necessarily mean the entire casino has that much money.

Analyst Vetle Lunde analyzed the comparison between "Open Interest" and "Exchange Reserve Proof" and found that MEXC, Bitget, and Bybit have significant leverage trading activities.

While Binance only has 16% and BitMEX has 26%, OKX and KuCoin are around 50%, indicating that cryptocurrency reserves are greater than the Open Interest;

In contrast, the Open Interest of MEXC and Bitget compared to actual reserves is very high, with MEXC at 457%, Bitget at 225%, and Bybit at 137%, showing that users on these platforms generally engage in leveraged trading.

Analyst Vetle Lunde believes that one should not overly trust the information provided by data aggregation platforms.

Using "Open Interest" as a measure to rank exchanges is not an objective standard.

Bitget's Astonishing Leverage, Supported by Platform Token Reserves

Another astonishing data shows that when excluding the exchange's platform token from the calculation, Bitget's leverage ratio significantly increases from 225% to 428%. This indicates that a large proportion of Bitget's platform reserves are supported by the platform token, making Bitget's leverage behavior almost identical to MEXC.

Inflated Trading Volumes! MEXC 1000%, Bitget 500%

"Compared to fake website traffic, manipulating trading volume/Open Interest is almost costless," tweeted a user in response to analyst Vetle Lunde.

Vetle Lunde's analysis of "daily trading volume" compared to "Exchange Reserve Proof" revealed that MEXC's daily trading volume is 1348% of the reserve size, Bitget is 570%, Bybit is 433%, and OKX is 194%.

These results imply that these exchanges are conducting multiple turnovers of their actual or partial cryptocurrency holdings daily, which could be deliberate behavior.

Bitget Excluding Platform Token, Similar to MEXC's Situation

Similar to the above, when excluding the platform token BGB reserves, Bitget's trading volume to reserve ratio significantly increases, approaching MEXC's situation.

Additional Information: Bitget's official response: Striving to break through its own advantages, innovating while maintaining security

Analysis Does Not Necessarily Reflect Reality

Analyst Vetle Lunde's inferences are based on data websites and information publicly disclosed by exchanges, which could be inaccurate statistics or exchanges only revealing partial data leading to erroneous analysis results. Vetle Lunde's research indicates that there is room for improvement in the statistical methods of exchange data ranking websites.

In addition, smaller exchanges offer more favorable trading fees and higher leverage ratios compared to Binance, which is one of the reasons for high leverage and frequent trading.

Walden, Bitget's Taiwan market lead, responded:

"Due to differences in business focus, various exchanges have different values and ratios. Generally, spot users trade less frequently and tend to hold for the long term, while contract users tend to engage in high-frequency trading, resulting in higher turnover rates. Because leveraged trading significantly increases trading volume, Bitget, which is gradually transitioning to contract trading, may have higher Open Interest (OI) and trading volume on the same asset reserve basis."