Cryptocurrencies and liquidity - 75% of exchanges manipulate the volume

The cryptocurrency market is currently not famous for its great depth. This is largely due to the current rates of the leading currencies, which do not encourage volatility to speculate on their rates and the prospect of increases for people who decide to buy this instrument. In a recently published report The Tie (website dealing with cryptocurrency market analysis) significant real liquidity data are indicated. Comparing them to those presented by the tables on the cryptocurrency websites of exchanges are quite divergent.

Cryptocurrencies versus liquidity and marketing

From a purely theoretical point of view, the depth of the market allows us to choose the areas that will be the most liquid. The amount of capital employed and volume is an important element from the investor's point of view. Faster sales or purchases undoubtedly favors the recognition of the exchange as more attractive. Market makers are encouraging the increase of turnover. However, it is difficult to estimate even the approximate scale of their operation. Nevertheless, their involvement influences the trading results on a given stock exchange. By inflating the volume, it becomes more attractive from the point of view of the speed of exchange and execution of orders. These activities are purely marketing.

86% of the volume has a suspicious origin

From the above-mentioned The Tie report published just a few days ago, the volume of the hundred largest was examined cryptocurrency exchanges. FROM Cryptocurrency Exchange Trading Volume Investigation (name of the report) shows that almost 86% of the volume of this market is of suspicious origin. In addition, they inform that more than ¾ of the platforms artificially increase their liquidity. In fact, only about 14% of the total daily turnover does not raise any doubts about the authenticity of these funds. The above conclusions were drawn on the basis of a monthly comparison of the trading volume with the number of visits. Our domestic exchanges (there were not many of them in this list), among others, Coindeal did quite well compared to the competition. It is on the second position in the general ranking, which gives a very high probability that it does not artificially pump turnover. The worst performer was the Bitmax exchange, which according to the report holds less than 1% of the authentic volume.

Cryptocurrencies and real liquidity - Conclusions

Of course, the report has some shortcomings, if only related to the number of visits to the website. Not every activity on it must mean a transaction. We also don't know how many traders are active. Nevertheless, the report largely shows how the market is inflated. In the case of extremely low values ​​assigned to some exchanges, it can be concluded that their volumes are indeed artificially created, for example, by automated trading bots.