Looking at cryptocurrency exchanges, one has to wonder how “real” their reported volume is. If statistics by Messari are to be believed, reported volume and real volume are very different from one another.
The Reported Trading Volume Scenario
Looking at any crypto asset data aggregator, it is evident that there is ample liquidity. For top assets, such as Bitcoin, USDT, and Ethereum, that seems only normal. When it comes to altcoins, things are often very different.
There have always been concerns over wash trading and inflated numbers. Dealing with centralized exchanges will never be fully transparent by any means. That doesn’t mean that all of the trading volume is fake either. There is simply a big difference between what is reported, and what can be verified at this time.
Taking the reported trading volume at face value is never a good idea. There will always be users trying to manipulate volumes, especially if some form of trading competition is going on.
Such events are designed to bring more liquidity to exchanges or trading pairs. At the same time, it also helps skew the numbers significantly.
Preventing traders from moving their own funds back and forth by placing buy and sell orders to bump up their volume is impossible these days.
Comparing With Real Trading Volume Figures
The information provided by Messari certainly is interesting in many different ways. According to the company, its “real volume” is verifiable data from top exchanges. More specifically, the team considers trading volume from certain exchanges about as legitimate as it can get.
Those exchanges include some top platforms, including Binance, Bitfinex, Coinbase Pro, Kraken, and so forth. At this stage, it is impossible to verify the actual trading volume of all exchanges. If no APi is available, there is no way to verify any data being shared by specific trading platforms.
Avoiding exchanges that don’t provide open APi access may be an option worth exploring. It is not difficult to provide this service when running a crypto trading platform. Refusing to make data transparent usually hints at how the company may have something to hide.
Exploring the Data Differences
Keeping all of the above information in mind, it is only normal that the real volume will be significantly lower compared to reported volume. What is surprising, however, is how big the discrepancies can be at certain times. It doesn’t matter which currency one is looking at either, as there differences will always be present.
The screenshot above depicts the current situation for July 8, 2020. Top currencies such as Tether and Bitcoin have 90% of their trading volume that can possibly be disputed. In the case of Ethereum, one could question the validity of 95% of its trading volume. A very intriguing metric, although it doesn’t tell the whole story either.
It is safe to assume that the real trading volume for crypto assets is much lower than most people think. That is, at least where the top exchanges are concerned.
Until more smaller platforms provide data over an API, there will always be questions regarding what is going on exactly.
Comparing the statistics before drawing conclusions is crucial.