Dark cryptocurrency side: How can you use market volume for market manipulations
Cryptocurrencies have been welcomed as the future of the financial, and many experts predict that they will revolutionize the way of money and trade. However, despite their potential, cryptocurrencies are not at risk. One of the most important threats is the manipulation of the market, which can have distant consequences for investors and the whole financial system.
What is the market manipulation?
The market manipulation applies to all persons or organizations to artificially influence the price of security, such as cryptocurrency, to gain unfair advantages. This can be done by using a variety of means, including the dissemination of false information, manipulating market data or engaging in other types of deliberate market disorders.
The role of commercial volume
Commercial volume is one of the main indicators used by merchants and investors to assess mood and market liquidity. When trade increases rapidly, it often indicates a strong price difference in which buyers and sellers are ready to trade at different prices. However, in the context of high turnover cryptocurrency markets, you can also use as a sign of manipulation.
How can you use the sales volume of market manipulations
There are several ways to use a large trade volume to manipulate the market:
- This can increase prices and make it difficult for real investors to buy or sell their assets.
- This can lead to a false narrative that drives price movements, even if there is no actual reason for change.
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Market Manipulation Examples in Cryptocurrency Markets
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bubble bitcoin 2017: 2017 during the year cryptography bubble increased significantly the commercial volume of Bitcoins, powered by speculation and noise. As a result, prices increased rapidly, reaching an unbalanced level.
- The FTX 2020: In November 2020, the FTX, which is an outstanding exchange of cryptocurrencies, used a high commercial volume to manipulate market data, creating a false narrative with strong flow and price stability.
3 ** Hack Coincheck 2019: In January 2019, Japanese Coincheck cryptocurrency exchange was hacked, causing about $ 523 million (about $ 700 million at current prices). Apparently, Hack was used to create a false ICO for the new cryptocurrency, which was then pumped with a large trade volume.
Market Manipulation effects
The market manipulation can be a distant consequence of investors and the entire financial system. Some potential risks include:
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System Risk
: If the market manipulation should become common, it could lead to the distribution of the system in confidence in the markets as a whole.
- Financial loss: Investors who buy or sell assets based on manipulated data may cause significant losses if the price movement is not contributed to real factors.
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Regulatory Control: The market manipulation can attract the laws and regulations, which leads to penalties and penalties involved.
Application
Cryptocurrency markets are still at an early stage of development and the market manipulation is still a significant risk.