Jeremy Posted May 27, 2020 Share Posted May 27, 2020 What is a fake trading volume in Crypto and what purpose does it serve? Quote Link to comment Share on other sites More sharing options...
0 Sophia Posted May 27, 2020 Share Posted May 27, 2020 (edited) Hi Jeremy, This is a great question about fake crypto trading volumes. According to research, as much as 99% of trading crypto volume is fake. This is a phony trading volume given by brokerages for their selfish reasons. As a result, this becomes a problem for people wanting to know the popular cryptocurrencies and come up with a trading strategy using data given in the market. Fake volume means the trade actually took place, but the traders were only engaging in exchanges trading all by himself to make it look like there’s liquidity. Why the need for fake trading volumes? One of the top reasons why fake volumes are created is to attract people to that particular crypto because everyone wants to trade on big liquid exchanges, and the fake volumes give this illusion. Traders avoid small illiquid exchanges because a higher trading volume is ideal for buying and selling digital assets. A low trading volume means low liquidity, which translates into difficulties when a trader wants to buy or sell his digital assets. The need for increased media attention is another reason fake volumes are created. This is because fake volumes help the brokerages rank highest on CoinMarketCap’s Exchange list, making them appear as authority platforms. This attracts media attention just like popular exchanges and helps them gain new users. These new entrants bring in high listing fees from cryptos wanting to get listed on the exchange’s platform. Another reason for fake volumes is to avoid closure given declining trade volumes get delisted by crypto exchanges. Fake volumes are also used to hide fake projects. When you are investing in any blockchain, it’s crucial to do a background check just as you would do in venture capital. Do not be fooled or pulled in by the momentary hype surrounding its token. Edited May 27, 2020 by Sophia Quote Link to comment Share on other sites More sharing options...
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Jeremy
What is a fake trading volume in Crypto and what purpose does it serve?
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