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Detecting unusual trading patterns on cryptocurrency exchanges by means of complexity measures

Author

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  • Jakub Zwydak
  • Marcin Wk{a}torek
  • Jaros{l}aw Kwapie'n
  • Stanis{l}aw Dro.zd.z

Abstract

Artificial transaction generation remains an important source of potential market manipulation on cryptocurrency exchanges, as it may distort reported liquidity and reduce market transparency. This study proposes a diagnostic framework for detecting unusual trading patterns based on complexity and statistical-structure measures derived from high-frequency trade-level data. The analysis considers log-returns, trading volume, and transaction counts, using tail distributions, autocorrelation functions, multifractal characteristics, approximate entropy, and detrended cross-correlations. The methodology is applied to BTC, ETH, and XRP traded on Binance, Bitget, KuCoin, and Kraken over the period from April 1 to June 30, 2025. The results reveal a pronounced anomaly on Bitget for BTC and ETH after mid-May 2025. The number of transactions increases sharply, but there is no proportional increase in traded volume or return fluctuations. This regime is characterised by numerous low-volume trades, weaker autocorrelations, reduced multifractal organisation, higher short-pattern irregularity, and weaker cross-correlations involving the transaction-count series. These features are consistent with a noise-like component in trading activity and may indicate artificially increased transaction counts, although they do not provide direct proof of wash trading. The findings show that complexity-based indicators can be useful for detecting exchange-specific trading anomalies that remain hidden in price-based measures.

Suggested Citation

  • Jakub Zwydak & Marcin Wk{a}torek & Jaros{l}aw Kwapie'n & Stanis{l}aw Dro.zd.z, 2026. "Detecting unusual trading patterns on cryptocurrency exchanges by means of complexity measures," Papers 2607.13916, arXiv.org.
    • Handle: RePEc:arx:papers:2607.13916
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