By analyzing web traffic of 48 frequently used cryptocurrency exchanges over a six-month period, a crypto researcher has found that leading cryptocurrency exchange Binance, based in Malta, eclipsed Coinbase, based in San Francisco, with the largest number of estimated visitors, and that traffic to the two leading exchanges far outpaced all other exchanges.
Larry Cermak, researcher for The Block, published a tweetstorm of his analysis showing that Binance had roughly 185 million visitors in the last six months, followed by Coinbase at 143 million visitors. Of the total 800 million who visited the 48 exchanges over the six months, Binance and Coinbase pulled in 41% of the traffic. Each of the other exchanges had fewer than 50 million visitors.
Writes Cermak,
“I analyzed the website traffic of 48 most frequently used cryptocurrency exchanges for the duration of 6 months. Even though traffic could theoretically be manipulated as much as volume, it’s hard to do at large scale and in a convincing manner. I don’t believe it happens yet.
Binance had the largest number of estimated visitors in the examined period with nearly 185 million; followed by Coinbase with 143 million. All the other exchanges had less than 50 million visits in the last six months.”
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Tracking the surge in traffic in April, Cermak speculates that large traders have entered the market.
“In November, prices were tanking across the board and volume was 23% lower than in April, which could mean that most of the buying is currently not happening by retail investors on exchanges but rather in OTC or through APIs, which is usually done by larger traders.”
Cermak says he can apply a formula using website traffic to determine which exchanges are faking trading volumes.
“By dividing the traded volume by the number of web visitors, we can get a rough idea of which exchanges are faking volumes. Directionally, this method should be accurate to spot the suspects. Nearly every exchange that vetted by Bitwise saw less than $1,300 per website visit.”
Although he identifies Bitcoin exchange itBit, headquartered in New York, as an outlier, he says it uses APIs, not visitors, to make large trades. It’s not the only exchange that stands out, however, when analyzed against an earlier report by Bitwise that found that only a handful of exchanges – 10 – are actually disclosing accurate trading volumes. The rest, reports Bitwise, are faking it.
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Cermak says the abuse is designed to fatten revenue streams for crypto exchanges. Bad actors can boost their popularity in the crypto community by gaming other crypto sites that have lots of eyeballs, such as CoinMarketCap (CMC). With a high ranking on CMC, exchanges can overcharge developers to list their upcoming coins. Cermak concludes,
“While analysis of web traffic won’t likely yield precise results, it appears to be a good method for identifying exchanges that fake volume and getting a rough idea of how much. At least until they start reliably faking traffic as well.”
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