There have been suspicions for a while that the markets are overinflated. In fact, fears of market manipulation have held up regulatory approval for a number of proposed Bitcoin exchange-traded funds (ETFs), frustrating many enthusiasts who believe that the eventual approval of ETFs will spur broader adoption of the technology by investors.

Now, in a twist, a company hoping to list an ETF has reported to US financial regulators that around 95% of all Bitcoin trading volume has been faked by exchanges.

Bitwise, a crypto-asset management firm, analyzed 81 exchanges, finding that 71 of them exhibited patterns that reflected artificial trading volume. One way to manufacture volume is via a technique called wash trading, in which someone simultaneously buys and sells the same asset. Although the exchanges in the study reported a combined $6 billion in daily volume during four days this month, Bitwise determined that only $273 million of it was real.

Bitwise’s global head of research, Matthew Hougan, told the Wall Street Journal that the point of submitting the analysis was to show regulators that “a real market for Bitcoin” still exists despite the storm of artificial trading. Solid evidence for this comes from the small number of exchanges that can actually verify that their trading data is real, he said. If approved, Bitwise’s fund would be based on the volume on those exchanges, which represents only around 5% of the generally reported total.

Why would exchanges dishonestly inflate their volumes? One incentive may be to attract ICO (initial coin offering) projects that want to be listed on exchanges that are facilitating lots of trading. To list such projects, some exchanges charge fees that can be as high as a few million dollars.

There are at least two important takeaways here. First, the real Bitcoin trading market is an order of magnitude smaller than is broadly reported. If you are eager to see mainstream adoption, perhaps that’s disappointing. On the flip side, however, if zeroing in on the exchanges operating honestly can move the needle with regulators and finally get an ETF approved, this bleak analysis might help spur the kind of adoption you’re hoping for.

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