Chainalysis Study Uncovers Truth in Trading Volumes
A recent study by the blockchain analysis firm Chainalysis unveils that the notorious practice of misreporting trading volumes among large cryptocurrency exchanges seems to be a thing of the past—well, at least for some. Conducted in November, the study highlights that giants like Binance and Coinbase have cleaned up their act since 2019, while a few stragglers, notably Bitforex, still cling to their misleading tactics.
The Bitwise 10: Crypto’s Honorable Heavyweights
In its analysis, Chainalysis focused on the “Bitwise 10,” a collection of the top ten cryptocurrency exchanges known for their reliability. This esteemed group includes the likes of Binance, Bitfinex, and Kraken. The study revealed a staggering on-chain trade ratio where these exchanges saw six Bitcoins in trade volumes for every single Bitcoin transacted on-chain, showcasing what seems to be actual trading activity rather than inflated figures.
A Closer Look at the Other Exchanges
Continuing its forensic examination, Chainalysis investigated another set of 25 exchanges, identifying 12 exchanges that initially reported highly suspicious trade volumes back in 2018. The suspects? Huobi, OKCoin, Bithumb, and others. Thankfully, these exchanges have gradually aligned their trading volumes with the Bitwise 10 standard, giving us hope that honesty is becoming trendy in the crypto scene.
The Outliers of Dishonesty
Unfortunately, not everyone has joined the honesty club. Chainalysis found that while the majority of exchanges have reformed, some, like Bitforex, still indulge in exaggerated reporting shenanigans. Imagine this: Bitforex boasted a jaw-dropping 40,000-to-1 trade volume ratio between January and November of 2019. For every Bitcoin that trickled onto the platform, they claimed to trade the equivalent of 40,000 Bitcoins. That’s like claiming to eat 40,000 pizzas when really, you’ve just shared a single slice!
What’s Next for Crypto Regulation?
Chainalysis’ findings echo concerns shared by crypto index fund provider Bitwise Asset Management, which suggested that a whopping 95% of trading volume on unregulated exchanges might be bogus. Consequently, changes are brewing. Major crypto data platforms like CoinMarketCap are adopting new metrics to assess exchange liquidity and curb manipulation. Perhaps this will further encourage exchanges to play fair!
