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 and the unexplainable declining price could arguably be attributed also to such methodical assaults. In the absence of a clearly defined regulatory framework enforced by an advanced AI-powered trade surveillance, the situation will inevitably degenerate. This process could well put a tragic end to one of the most promising Fintech innovations of the last decade.


Popular posts from this blog

Biden-Harris vs Trump-Pence: Where Are We Headed?

Understanding Cryptocurrency Markets Sudden Rallies and Crashes

Hitler’s Circle Of Evil: A Great Documentary to Watch