Forbes’ Crypto Report Claims Half of All Bitcoin Trades are Fake
Can you still trust your crypto exchange or e-brokerage reports?
An ongoing study of the cryptocurrency market by Forbes magazine stated on Friday that its analysis of 157 different cryptocurrency exchanges revealed that more than half, 51% to be exact, of the daily trading volume being reported about Bitcoin is fake news. This is not at all surprising to me, but it has to be disheartening news for crypto and decentralized finance (DeFi) fans. Bitcoin’s price per coin today of $19.7k pales in comparison to last fall’s, when it was rocketing towards what would become its peak price of $67.5k in late November.
Market gloom and doom though, had not significantly slowed down daily Bitcoin trading or so we had thought, but the research conducted by Forbes now shatters that notion. According to Forbes’ estimates, “the global daily bitcoin volume for the industry was $128 billion on June 14. That is 51% less than the $262 billion one would get by taking the sum of self-reported volume from multiple sources”, such as CoinMarketCap, CoinGecko, Nomics, Messari and more. The reality is that there is no industry-accepted standard method for calculating the daily volume of Bitcoin trades, even at this stage in the game. Reality bites.
Investors now can’t even trust the numbers being reported about Bitcoin, much less its stability. This study could give Bitcoin, the most recognizable cryptocurrency brand and what Forbes calls, crypto’s gateway drug, a second black eye. Bitcoin’s price per coin plummet has hit Bitcoin with multiple, hard right hands, and now the news that more than half of the coin’s reported trades are fake just bonked Bitcoin with a left hook. According to the study’s authors, “the biggest problem areas regarding fake volume are firms that tout big volume but operate with little or no regulatory oversight that would make their figures more credible.”
Bingo. Then again, a lack of regulatory oversight is affecting the success of the entire cryptocurrency movement, not just the level of trust in its daily reporting of trade volumes. As I have been suggesting since last fall, cryptocurrency has ushered in a golden age of money laundering, fraud and other associated FinCrimes, simply because there is no regulatory oversight in place anywhere. Though the Forbes report touches on the crypto market’s tendencies to appear like a pump and dump scheme and what that means for investor trust, it fails to address the negative effects that money laundering and other FinCrimes are having.
Forbes obviously put a lot of work into its report and the data is pretty compelling, and I would encourage you to scroll through the numbers when you have the time. From my perspective, the study’s data represents more of the same and is preaching to the choir. What does that mean? It means that the concept of DeFi, as it exists today, is about to go through some things. That is because there are no regulations and hardly any reporting of anything going on, a scenario that makes DeFi fans, criminals and professional money launderers jump for joy, but makes the government angry and the rest of us nervous. Not everyone is willing to risk their fiat wealth for Bitcoins, at least not yet.
The US government is constructing its cryptocurrency response as we speak, in regards to how it gets regulated and reported upon going forward, especially in regards to money laundering and fraud. The executive order issued by the White House on March 9, 2022 was no joke, and was a warning shot issued to decentralists that centralization is coming soon. The golden age of money laundering is about to turn into the golden age of money tracking.
Will that kill the spirit behind Bitcoin for current investors, and the motivations of anyone potentially interested in investing in it? Or does centralization and its rules and regulations give those investors more confidence, and therefore crypto coins like Bitcoin a brighter future than the certain death common to most pump and dump schemes? I think so, but along the way we should expect more reporting, like the study I’ve referenced here from Forbes, that throws some shade where it is needed.
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