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Showing posts from August, 2018

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…

Is 'Swarm Layering' Choking the Cryptocurrency Trading Markets?

Layering is a strategy where a trader makes and then cancels orders that never intends to have executed in hopes of influencing the cryptocurrency price. (See also: Wikipedia) Based on my empirical observations, I argue that this artifice is massively used to generate fake levels of support and resistance with the goal of producing a controlled sideways market forced on Bitcoin and extended to Altcoins, especially the top-tier ones.
If Layering is pursued by a handful of traders, it would be relatively easy to identify the perpetrators and face them with adequate punitive measures either based on an existing regulatory framework and/or a carefully crafted user policy. But there seem to be at least two techniques that allow this kind of systematic market manipulation to continue undisturbed.
The first one uses the well-known crypto signals and trade recommendations often based on structured and paid levels of individual membership.
The second technique is based on a massive utilization…