Research: Exchanges Still Overstating Trading Volumes

When you open the data platform CMC, you may be puzzled by why there are so many exchanges listed that you have never heard of. In fact, it's not just you, everyone should be quite puzzled. A recent report by CryptoCompare found that the reported trading volume by exchanges still differs from the actual trading volume.

In the cryptocurrency data analysis firm CryptoCompare's Exchange Review released in July this year, the results indicate that the cryptocurrency industry still has a long way to go in terms of transparency and legitimacy.

The research covers rankings by trading volume, major fee types, derivative products, fiat currencies, Bitcoin and stablecoin trading volumes. Additionally, the firm also analyzed miner fees and decentralized exchange volumes.

CryptoCompare rates exchanges based on a range of criteria including geography, regulatory assessment, data provision quality, team quality, and strategic investments.

Based on these criteria, the team found that some top exchanges like Coinbase accounted for only 5% of the $310 billion cryptocurrency market trading volume in July. Whereas lower quality exchanges accounted for 64% of the total volume at $3.16 trillion.

Meanwhile, the non-top tier exchange LBank ranked first with significantly high trading volumes, with an "average 15 times larger than Coinbase". Surpassing OKEx and Binance, it dominated with a trading volume of up to $450 billion, making it one of the top three exchanges "by the numbers" alongside Coinsbit and CoinBene.

The report pointed out that despite being recently embroiled in an investigation by the Commodity Futures Trading Commission (CFTC), BitMEX's trading volume remains strong. According to data from the cryptocurrency analysis firm TokenAnalyst, the platform's trading volume is essentially unaffected by negative news.

Although the trading volume remains stable, BitMEX's net outflow of funds soared to $73 million, indicating that the CFTC investigation has caused some tension in the market.

The report also noted that Grayscale's Bitcoin trust product GBTC "continues to grow", with a 6% increase in trading volume month-over-month, reaching $1.98 billion in July.

Earlier reports from ABM also showed that GBTC has outperformed most traditional assets this year and has become one of the most actively traded securities in the OTC Markets Group in the U.S.

CryptoCompare co-founder Charles Hayter believes:

There is a need to raise awareness and accountability in the industry, and our "Exchange Review" will continue to provide reliable data on the rapidly growing crypto assets.

Overall, smaller exchanges tend to exaggerate trading volumes to attract potential traders. This issue has not disappeared, but as market transparency improves, identifying such suspicious behavior has become increasingly simpler.

Further Reading

• 2019 Mid-Year Report on the Cryptocurrency Industry
• Wash Trading: Top 10 Cryptocurrency Exchanges Only Guarantee 7% of Bitcoin Trading Volume

Join now to get the most comprehensive information on fintech, blockchain insights, and industry examples!