The Role Of Trading Volume In Market Manipulation

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Dark cryptocurrency side: The role of trading volume in market manipulation

Cryptocurrencies, such as Bitcoin and Ethereum, have gained immense popularity in recent years, and their prices change extremely on the basis of market moods. However, the darker side of the cryptocurrency market appeared among the noise and speculation surrounding the digital thesis. Market manipulation, a form of confidential trading that uses price discrepancies to get profits from other activities is increasing to a high level of commercial activity.

** What is market manipulation?

Market manipulation refers to all activities or strategy, which artificial affects the security price, such as assets, to manipulate the market. This can be done using the average variable, including the dissemination of false information, the use of confidential knowledge or engaging in other forms or market engineering.

The role of trading volume in market manipulation

The commercial volume is cited as one of the key indicators that should not be released to making investment decisions. However, the growing group of research suggests that trading volume can also be used to identify potential market manipulation. Here's how:

This creates the "echo chamber" effect, in which most transactions are strengthened and strengthen the idea that there is no basic trend or formula.

Increased noise : Trading volume can create a sharp increase in noise activity that can be used to strengthen false signals and creative artificial price movements. For example, if a small group of traders buys large amounts of bitcoins, their actions can cause a speculative craze, which leads to a rapid price increase.

Ponzi patterns : Large volume trade activity can also be used as a red flag for Ponzi schemes or other forms of market manipulation. If the power of buyer's buyer is growing rapidly, it may indicate that they are using funds from new investors to support their own transactions.

Case studies: Manipulation of the cryptocurrency market

Several high -profile cases emphasized the role of trading volume in the manipulation of the cryptocurrency market:

Coinbase : In 2019, the investigation carried out by the Office of the Prosecutor General in New York showed that Coinbase failed to fail to fail. Millions of dollars of unpaid transactions and confidential information. The company was accused of manipulating the price of Bitcoin and other cryptocurrencies via a large volume transaction.

binance : In 2020 it was revealed that Binance, one of the largest cryptocurrency exchanges in the world, used a complex system of manipulation of trading in order to make artificial inflated prices of some assets. This included the use of false or manipulated market data to increase the price of some coins.

Application

The relationship between trading size and market manipulation is complex and multi -faceted. Although large volume transactions can be used as a signal, they should not be released to make investment decisions. The use of trading volume in market manipulation emphasizes the need for vigilance and transparency on the cryptocurrency market.

Regulatory authorities, investors and traders must cooperate to discover and prevent market manipulation. This includes: