Market manipulation concerns are some of the reasons why institutional investors have shied away from crypto-assets. Seen as a serious problem, people continue to call for increased regulation as a way of firmly establishing the sector. However, Binance CEO, Changpeng Zhao, believes there is far more manipulation in the traditional equity markets than in the crypto-sector.
Market Manipulation Debate
According to the executive, there are close connections between the media and insiders in traditional markets. While conventional markets have many public instruments, the fact that most of them trade in a single market is a significant disadvantage. The structuring according to Zhao is all wrong and a key catalyst to market manipulation.
Cryptocurrencies, on the other hand, trade in multiple markets given the number of crypto exchanges. This way they are hard to manipulate. While it is impossible to eradicate market manipulation, it occurs far less in cryptocurrency markets, according to the Binance chief.
Fake Trade Volume Stand-Off
While market manipulation may not be a big issue, the cryptocurrency market continues to struggle with a string of other underlying issues. For instance, it is in the public domain of how crypto exchanges manipulate trade volumes as a way of enticing new clients.
Reports of exchanges faking daily trading volume is not something new. A new report indicates that more than $3B USD in daily trading volume cited by exchanges is not real. The number could be much higher given that this is the only amount that the research was able to prove.
Additionally, an analysis on Medium by Sylvain Ribes, shows his belief that big name exhanges, including Huobi and OKex, could be providing reports of fake volume.
Can Everyone Get on the Same Page?
While most people might argue such actions are not illegal given the lack of regulations, the same raises serious credibility issues. Trade volume manipulation goes a long way in affecting the market.
The fact that investors at times use this information for investment purposes calls for a change of ways. For instance, investors could end up buying coins that don’t budge because of actual low volume.
One cannot dispute the fact that fake trade volume is another type of market volume. Regulation is thus key to curtailing the vice as a way of ensuring people trade with accurate information at hand. In addition to fake volumes, high price swings/volatility is another issue that continues to clobber the cryptocurrency marketplace. Unusual price swings continue to spook high net-worth investors from pursuing opportunities in the burgeoning sector. This harms us all.
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