By The Blockchain Transparency Institute recently gives an inspection report that reveals global wash trading has decreased by 35.7% among the top 40 exchanges. Wash trading has always been a serious pressure point for the cryptocurrency markets, which might be slightly expected in such an unregulated market. However, the situation appears to be getting better, according to a recent report. Since the beginning of the year, the percentage of wash trading among the top exchanges has dropped drastically by almost 36%, while Bitcoin’s wash trading volume stands at around 50%.
What is Wash Trading?
A process whereby a trader buys and sells a security for the purpose of feeding misleading information to the market. This is referred to as Wash Trading. One entity can serve as both the buyer and the seller of a specific coin (or any asset), pumping the volume and motivating other traders to follow the price movement. In some situations, wash trades are executed by a trader and a broker who are colluding with each other and executing the buys and sells as well.
Wash Trading is illegal in various countries, including the U.S. The report shows the U.S. and Japan as the two countries with the cleanest exchanges, as both countries have stringent regulations barring such practices.
Cryptocurrencies at risk
The wash trading volume of Bitcoin is around 50%, which is the lowest among the top 5 cryptocurrencies. The highest percentage, 82% is possessed by Bitcoin Cash. Ethereum and Litecoin follow at 75% and 74%, and XRP comes in at 55%.
From the figures, it is almost clear to everyone that the most heavily impacted tokens in the top 25 are Ethereum Classic, Dash, and Monero, which have been wash traded with almost 80% of their volumes.
As far as stable coins go, USDT remains the most widely used one for wash trading. Its real trading volume is 94%, even after we exclude 67% of wash trading. USDC has the lowest wash trading volume of 7%, and its actual volume puts it in second place. DAI has a wash trading volume of 30%, PAX is next with 13.7%, and TUSD follows with a bit under 12%.
Exchanges and Wash Trading
The most heavily-impacted cryptocurrency exchanges are Bibox and OKEx. Their wash trading comprises more than 75% of all trades. Even after we exclude their wash trading volume, however, they are still among the top 20 exchanges by trading volume.
The cleanest exchanges, on the other hand, are Kraken, Coinbase, Upbit, and Poloniex.
Less than 10% of both Gemini and Binance’s volumes are reportedly wash traded. A previous report showed that Binance’s BTC/USDT market had a real volume of 100%.
Wash trading has always remained a serious issue for space. In fact, it’s one of the main issues that will have to be addressed in order for the US Securities and Exchange Commission (SEC) to approve a Bitcoin ETF.
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