Bitwise: 95% Of Bitcoin Trading Volume Is Fake


By Christopher Robbins/

A recent study claiming 90 percent of crypto exchange volume is “suspect” may have understated the problem, according to Bitwise Asset Management.

(Last week), the cryptocurrency-focused asset manager presented the U.S. Security and Exchange Commission with results of its own study, which found that 95 percent of the $6 billion spot bitcoin trading reported by exchanges is fake.

The actual real average daily volume in bitcoin trading is closer to $270 million, according to Bitwise.

The report follows a study earlier this week that claimed 90 percent of crypto exchange volume is fake.

“The fact that a significant portion of the reported daily volume in bitcoin is demonstrably fake will be unsurprising to many in the industry,” said Matt Hougan, global head of research at Bitwise, in released comments. “Market participants have long understood, and experienced first-hand, that a substantial portion of reported volume is fake. This report is simply the first time that the data has been comprehensively assembled and analyzed to formally corroborate those anecdotal suspicions.”

Bitwise’s research was based on an analysis of the top 81 cryptocurrency exchanges by reported volume on According to the study, almost all of the volume reported on 71 of the 81 exchanges is fake or wash trading.

For example, trades on CoinBene, the largest reported exchange with $470 million in average daily trading volume, have a median spread of 15 dollars. Yet trades on Coinbase Pro, with $27 million in average daily volume in bitcoin, come in with a median spread of 0.01 dollars. The researchers found no credible reason for an exchange with higher volume to report a median spread 1,500 times higher than an exchange with smaller volume.

Exchanges are incentivized to report fake volume to attract initial coin offering (ICO) listing fees, according to the report. Bitwise says that these fees can run between $1 million and $3 million per listing.

In the Bitwise study, there were 10 exchanges accounting for the bulk of the real average daily volume of bitcoin trading. While U.S.-domiciled exchanges account for less than 1 percent of the reported trading volume, the study suggests that U.S. exchanges account for up to 30 percent of the real daily trading volume in bitcoin.

Most reported trading takes place on exchanges with “unknown domiciles,” according to Bitwise. The 10 exchanges responsible for the bulk of real trading volume tend to be better capitalized and more closely regulated than others.

Screening out the “fake” bitcoin volume results in a market with tight spreads, tight arbitrage and consistent prices, said Bitwise.