I have a hard time believe its anything other than market makers providing the illusion of trades. Have you seen the price swings? If there was real volume and real transactions asides from trades, how would such insane swings be possible?
Last year was pretty active; solid volumes were sold at -6% for cash, now it just floats around the market price.
I understand why exchanges are interested in wash trading but I don't know why market makers would provide any illusion since each transaction costs in order of 0.075% of its value.
Take Binance as the largest crypto-exchange. Market makers are the ones who put buy or less limit orders. Market takers are the ones who put market order to "eat" limit orders. Market markers are not paid to provide liquidity. However, their fees decrease from, e.g., 0.075% per trade to say 0.030% per trade if they trade millions $ per month.
Can you elaborate? I'm guessing you mean whales?
Also, how is this any better or different for that matter, for the most stock exchanges like NYSE when most of it is Algo based bit trading?
Bitcoin definitely suffers from volatility, how much you can attribute that to large holders (whales) is incredibly difficult; consider that the Japanese government, as were the US Marshalls, fill(ed) that role as they took over Mt. Gox and Silk Road respectively. Other local governments have also created large (relatively to a private individual) mining operations as job creator (Montana).
So, again, I'll first ask you to define what a Market is, and what exactly constitutes a Marker Maker, because what you're describing is not exactly clear nor is it intelligible given the context of what the aforementioned are and their roles in price discovery.
You do have a point about BTC adoption as a mean of payment lagging, but here the topic is trading on exchanges. And as soon as LF matures a bit this is also going to get solved.