Up to 87% of Exchange Volumes Under Doubt: Independent Research by The TIE
Based on reported visits, most exchanges show much higher trading activity than expected from organic users with a reasonable personal footprint on trading.
In another discussion related to the extraordinarily high exchange volumes, new independent research by The TIE platform reveals that beyond the leading exchanges, volumes do not match the projected activity based on the number of user visits.
The discoveries match previous observations that some exchanges were revealing higher trading activity, with a handful of accounts possibly powered by bots achieving extraordinarily high volumes. In an ecosystem where crypto-to-crypto trading is more influential, those types of trading anomalies are easy to achieve.
At the same time, exchanges like Binance and Kraken see a much closer match between visits and trading activity, as well as leading exchanges like Gemini. The report is based on an estimated $591 investment per user per web visit.
While some exchanges fall in the mid-range estimation, possibly showing at least some of the volumes are real. But for a handful of exchanges, the results are far from normal. Market operators like OKEx show a relatively large mismatch between potential visitors and trading activity. But newer markets like ZB.Com, ZBG, Bit-Z and partially DigiFinex show more than 98% of the volumes potentially originating from a lesser number of visits.
In the case of Bitfinex, an exchange that has been accused of price manipulation, the ratio is in fact reasonable. Binance is also matching up to 78% of the traffic with trading activity. In the past, Binance has been accused of hosting multiple accounts. With the reintroduction of the know-your-customer screening, Binance has potentially limited the creation of bot-related accounts, at least somewhat.
The report arrives at a time when the digital asset markets are showing heightened activity based on stablecoins, especially Tether (USDT). On the Bitcoin (BTC) markets, the share of USDT trading rose to 83% of all activity, based on CryptoCompare data. Newcomer exchanges are also a part of this activity, as in the case of Exrates. This exchange matches only around 4% of its traffic to the volumes.
The nature of digital asset trading is seen as an important factor in inviting mainstream finance to flow into BTC and other assets. The potential for volume inflation and manipulation is seen as a major problem in the crypto space.