Posts

What does it take to generate a significant crypto FOMO wave?

FOMO, or fear of missing out, is defined as a "Pervasive apprehension that others might be having rewarding experiences from which one is absent, FOMO is characterized by the desire to stay continually connected with what others are doing." (Wikipedia)

Here is the break down of a crypto FOMO wave:

1- Ad hoc and well-publicized interviews followed by huge bots- operated retweets, Reddit messages, LinkedIn posts, etc. 

2- News leak of a "new product" bringing about an unclear "disruption", followed by bots and humans social media amplification. 

3- A huge wave of 'wash trading' to generate the appearances of a sudden expanding market liquidity. 

4- A massive 'swarm layering' operated in one of the main crypto exchanges across the world to create fake 'support'. 

5- 'Arbitrageur' bots push to flatten the market prices upward while 'front-runners' fill up their bags as never before. 

HFTs and their armies of bots are indeed th…

Are HFT-based market manipulations the endgame for cryptocurrencies?

The short answer is, not quite yet. The long answer requires more words. 
We should agree the main cause of the wild volatility of the cryptocurrency markets resides in the massive use of bots and hashtag#HFT. This statement becomes clear if we consider that more than 80% of all crypto trades are reportedly conducted by bots versus the 50% on the US stock market (40% in Europe and Japan). We may argue that HFT helps to increase the liquidity and to stabilize the crypto markets. Yet that is not entirely confirmed by observations and analysis. In fact, HFT offers a suitable context for more complex and stealthy methods of market manipulations based on 'swarm layering' and systematic wash trade. These reckless manipulation techniques offer also an opportunity for mutual attacks by followers of cryptocurrencies in close competition. The overselling of hashtag#ETH and hashtag#LTC

A Decade of Cryptocurrency History to the Chagrin of Gloomy Naysayers

The Bitcoin network was created on January 3, 2009 with the release of the first Bitcoin client, wxBitcoin, and the issuance of the first Bitcoins. The major revolutionary merit of cryptocurrency's underlying technology has been to create a reasonably solid solution in the world of bits and bytes for what goes as "double spending". And by doing this it has brought a good deal of sunshine to what has traditionally been seen as the arcane called *fiat currency*: Nowadays, an increasing number of people across the planet easily understand that money as we know it, is nothing more than a politically controlled and manipulated system for storage, transfer, and accounting of value. Many realize there is no heavenly magic behind the money they use on a daily basis. Once the enigma is gone, what remains is just a simple historical human invention: A technology called 'money' that, like many other inventions, could be redesigned, transformed and improved to better serve t…

ICO IS DEAD, LONG LIVE THE ICO!

More than 95% of post-ICO startups fail for a number of reasons such as bad business concept, inadequate execution, inexperience, unpredictable market events, etc. ICO, or whatever we want to call this new fundraising paradigm, by far is not the direct cause of failure nor, on the other hand, can it be considered as the mantra to make disappear major business model and execution inefficiencies. 
We need to keep in mind: ICO is just a new model, a fresh approach that tries to solve a fundamental problem of the entrepreneurship life cycle, which is not related to the performance of a startup team but to the accessibility tout court: The main goal of ICO is the democratization of access to investment capital. 
Any critique of ICO should ultimately offer a workable solution for the accessibility issue otherwise it becomes ultimately a shallow ideological prejudice with the inevitable resulting dogmatic rejection of any innovative approach. 
Until we elaborate a better response we need to wor…

Can massive swarm cryptomarket manipulations unleash catastrophic unplanned consequences?

The short answer is yes. The long answer needs a few clarifications.

We can distinguish between at least 2 categories of bots operating across the cryptomarkets: - Trader bots - Manipulator bots 

The first category has a modus operandi based on complex predictive modeling, that is, the anticipation of trends and patterns. The 2nd class of bots follows a swarm logic and pursues a different goal: Its purpose is to feed the first category of bots with fake data. By adopting such strategies, this class of bots constantly acts to promote or to prevent certain trends and patterns and hence behaviors in and by the average trader bots (and humans) that move along a predictive line of reasoning. 

Given that these bots are run by rival and non-coordinated groups and individuals across structurally hyper-fragmented and unregulated cryptomarkets in a High-Frequency Trading context, there is always the possibility of triggering either a virtuous or vicious cycle that could become very powerful via an…

Could crypto Exchanges run market manipulation schemes?

After my recent posts on 'swarm layering', a reader asked a chilling question: "Do you see any possibility cryptocurrency exchanges could somehow support swarm layering schemes by using bots?" My response is that I still do not have any specific piece of evidence to prove such manipulations by exchanges but I can't exclude the possibility either. Objectively, pressed under the competition and particularly starting the activity, exchanges may have a strong motivation to use 'wash trade' artifice to create misleading artificial activity in their marketplace. They might well unloose their bots and follow a 'swarm logic' strategy to achieve deceitfully their manipulative goals. Exchanges could unleash a swarm army of bots to put in place an anti-flash-crash barrier to avoid bad press and serious financial damages. But the same exact bots could also be deployed to pursue complex market manipulations objectives by generating e.g. massive but entirely fa…

Beyond Trade Spoofing and Layering: CRYPTO SWARM LAYERING

Those who follow closely the cryptomarkets should know that it is "against the law to spoof, or post requests to buy or sell futures, stocks and other products in financial markets without intending to actually follow through on those orders." Anti-spoofing is indeed part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act passed on July 21, 2010.
But the reality of crypto trading in 2018 has gone way beyond our lawmakers' imagination by creating what I call "swarm spoofing," or more appropriately "swarm layering."
Swarm layering uses a mixture of two techniques to achieve its market manipulation objectives.
One procedure is based on human trade agents structured in ad hoc online groups via specialized media and social media facilitation.
The other method is based on a massive utilization of cryptobots in the exclusive context of High-Frequency Trading (HFT).
What distinguishes both techniques is their use of a logic based on Swarm I…