Two months ago, Sylvain Ribes wrote a rather interesting article, and presented the results of his research on fake volumes on exchanges: https://medium.com/@sylvainartplayribes/chasing-fake-volume-a-crypto-plague-ea1a3c1e0b5e His finding was rather disturbing. “By my reckoning, over $3 billion dollars of daily volume is nonexistent. Possibly more,” he wrote.
The charts in the article are quite alarming, and makes one wonder the true magnitude of fabricated volume on all exchanges. Is it half of all volume? Is it 70 percent? Or is it even more?
I will not answer this question, but instead take you somewhere to see fake volume with your own eyes: TopBTC, an exchange that lists “specialty coins.” Examine trades on any pair on that exchange, and you will notice fake transactions quite quickly.
Take the ETH-OMG pair… At the time of writing, the highest bid was at 0.01685, and the lowest ask at 0.02050: http://topbtc.com/home/Market/index/market/ETH/coin/OMG.html This is a somewhat large margin, as is common in smaller exchanges, but what is interesting is that some random trade takes place on this pair (as well as most, if not all other pairs) every three minutes in average.
Here is how it goes: the bot will enter, say an ask of .01809, and then it will go ahead and “buy” it in less than two or three seconds. None of the actual users will get a chance to complete the transaction that quickly, so the trade will conclude as intended, and the volume will increase. About three minutes later, a similar bid or ask will be placed, and will again be fulfilled almost instantly. The highest bid and the lowest ask amounts will often stay there for hours, as there are few people participating in that market, but exchange bots will be inflating the volume with fake transactions every three minutes in average.
Sometimes things get even more interesting… As I happened to notice a moment ago by random chance, asks and bids are randomly being placed and removed on the ETH-KWH pair on the same exchange every single second. It turns out that it was a code glitch! Someone entered an order and closed the gap between the lowest ask (0.00003900) and the highest bid (0.00003899). Not finding any room to place a fake order, the bot started to place them in other places, and still fulfilled them! If you read this within the hour of publication, you can view the list of past trades indicating figures that are OUTSIDE of the highest bid-lowest ask margin: http://topbtc.com/home/market/index/market/ETH/coin/KWH.html I suggest you take a screen snapshot!
This is serious, and this is something for all cryptocurrency investors to think about. The volume of a coin is the primary indicator of its popularity, yet exchanges ruin this measure for everyone, and lead them to make investment decisions on false information. BEZOP, for example, celebrated achieving one million dollars of daily volume with a tweet five hours ago: https://twitter.com/BezopNetwork/status/1000703020303298562 Guess what exchange it is on!