That Exchange's '24h Volume' Number Might Be Mostly Wash Trading. Here's How to Tell
6 min read
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6 min read
An exchange can show you a huge "24h volume" number for a coin and most of it can still be fake. In 2019, Bitwise Asset Management analyzed 81 crypto exchanges reporting more than $1 million in average daily volume and found that 71 of them were showing data that was substantially wash trading, not real trades. This isn't a rumor from a random forum post. It's called wash trading, and it is one of the oldest tricks in crypto for making a coin or an exchange look busier than it is.
Wash trading is when the same person, or a bot controlled by the same person, buys and sells an asset to themselves. No real ownership changes hands in any way that matters, and no genuine buyer or seller is on the other side of the trade. But the exchange still counts it as a transaction, and that transaction gets added to the "24h volume" figure everyone sees on CoinMarketCap, CoinGecko or the exchange's own homepage.
Why would anyone do this? A high volume number makes a coin look liquid and popular, which can lure in real traders who assume heavy trading means it is safe to buy or sell without much price slippage. It can also help a smaller exchange climb ranking tables that sort by volume, since more listed volume can mean more visibility and more real users signing up.
Bitwise's finding wasn't a rounding error. The firm's own report, filed with the SEC in March 2019 as part of a Bitcoin ETF application, found that those 81 exchanges together reported roughly $6 billion a day in bitcoin volume, while Bitwise estimated the real figure at closer to $270 million, concentrated on just 10 exchanges whose prices tracked each other within less than 1%.
The problem didn't go away once regulators started paying attention. A 2022 Forbes analysis by Javier Paz looked at 157 exchanges and estimated that on a reference day in June 2022, self-reported bitcoin volume ran about 51% higher than the volume Forbes could actually verify, with the gap much wider on smaller platforms. A peer-reviewed study published in the journal Management Science in 2023 (Cong, Li, Tang and Yang) used statistical tests on trade-size patterns across 29 exchanges and found wash trading averaged more than 70% of reported volume on unregulated exchanges, reaching as high as roughly 80% on some individual platforms.
This isn't limited to obscure platforms nobody has heard of. On 19 March 2021, the US Commodity Futures Trading Commission ordered Coinbase to pay a $6.5 million penalty for false, misleading or inaccurate reporting and wash trading on its former GDAX platform. The CFTC's order found that between January 2015 and September 2018, two of Coinbase's own automated trading programs occasionally traded against each other, and those self-matched trades were folded into the volume data Coinbase shared with outside data aggregators without disclosing what they were. Separately, a former Coinbase employee ran manual wash trades in the Litecoin/Bitcoin pair over a six-week stretch in 2016. Coinbase neither admitted nor denied the findings.
The lesson isn't that any one exchange is untrustworthy today. It's that reported volume passing through public data aggregators has been polluted by wash trading at platforms of every size, including some of the biggest names in the industry, and that isn't something a reported number alone can tell you.
None of this means every volume number you see is fake, or that you need to distrust every exchange you use. It means a single reported figure, on its own, was never designed to be checked, and now you know what to check instead.
If you're deciding whether a coin is liquid enough to trade comfortably, the exchange's own headline volume number is the least reliable piece of evidence you have, not the most. Bitcoin is one of the few assets where enough independent, cross-checked data exists to see past any single exchange's own reporting, and NetWort's Explore screener lets you check an asset's actual price behavior and volatility across your own tracked history, rather than taking one platform's volume claim at face value. If the fee schedule on the exchange you use is part of what you're weighing, our breakdown of what Indodax, Tokocrypto and Pintu actually charge covers that side of the decision directly.