Wash trading getting out of hand! 93% of all the Litecoin changed hand yesterday
93% of all Litecoin in circulation changed hands just, according to CoinMarketCap, the leading website of cryptocurrency tracking.
Mati Greenspan, one of the most influential and successful cryptocurrency analysts, pointed out in his Tweet yesterday that CoinMarketCap’s issue with displaying wash trading volumes is getting “a bit out of hand.”
I think this wash trading thing is getting a bit out of hand @CoinMarketCap.
Reported 24-hour volume of Tether is nearly 5 times the total market cap.
If we believe these numbers, 30% of all BCH in circulation has traded today, 66% of all EOS, and 93% of all Litecoin. pic.twitter.com/BbpQIYGjg2
— Mati Greenspan [not trading advice] (@MatiGreenspan) December 2, 2019
So what’s the problem?
Wash trading refers to the process in which someone buys and sells an asset in order to provide the market with false information.
There are plenty of examples that could back the claims that a lot of the market’s traded volume is subjected to wash trading. It’s not just those few cryptocurrencies that Greenspan pointed out that look inflated through the roof. Status, for example, is another one that looks fishy, to say the least. It has a market cap of around $37 million and traded volume over the past 24 hours of $183 million.
The huge amount of wash trading leads to falsified data, which leads to a bubble. This is a scenario that a lot of institutional investors avoid.
Interestingly enough, back in November, CoinMarketCap was under the gun for displaying wash traded volumes once again. The website was supposed to introduce a new “liquidity” metric that addresses these issues. Still, there’s obviously room for development in this particular regard.
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