The Reality of Chinese Bitcoin Trading Volumes

Posts on China's premier social network Weibo have suggested that some of the country's largest bitcoin exchanges are manipulating trading volumes to gain more customers and rise through the ranks of the world's most popular exchanges.

Chinese trading activity could be having an effect on the worldwide bitcoin price once again, with prices dropping from a high of $859 to a low of $810 in trading over the past weekend.

Trades on China's now-largest bitcoin exchange, Huobi, show prices with four decimal places, higher than the maximum offered to customers on the web interface.

At least one trusted Chinese bitcoin trading source told CoinDesk the charts pointed to manipulation from within, the result of either in-house trading bots or software that mirrors or mimics trades on rival exchanges to project an appearance of high volume.

OKCoin and BTC China reintroduced trading fees, which had been absent from most Chinese exchanges in 2013 and possibly created higher volatility worldwide.

"We've known for a while that other Chinese bitcoin exchanges have been faking data. We've seen our trading volumes drop off heavily while others have, supposedly, witnessed massive surges."

Fakery? China-based bitcoin exchanges have been accused by users of manipulating trading volumes before, with some claiming to shift over 30,000 BTC in December amidst bitcoin's price plunge, and users claimed the actual number might be a tenth of that.

Some have suggested the high volumes are due to high-frequency trading bots, and one said the exchange is able to split large orders into small ones.

Xu Mingxing, CEO of OKCoin, has publicly stated a dislike for HFT software and the effects it has on exchange volumes, despite apparently allowing large trades through OKCoin's API. All kinds of exchanges can fake volumes merely to gain attention, in the hope traders will see them as the most popular platform and move their activities there.

How can you tell? It's difficult to tell for sure if exchange trading volumes are being manipulated.