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The cryptocurrency market has been under pressure in the last days. Bitcoin (BTC) is around $ 7,500 and the Ethereum (ETH) just under $ 600 . The main news that triggered these sales is the one involving the US Department of Justice and the CFTC, the derivatives trading commission. These two major federal agencies, which in the past have been very interested in the phenomenon of new digital currencies, have opened an investigation into the possible manipulation of the Bitcoin market.
The investigation would mainly focus on two practices that are considered improper by the supervisory bodies: the spoofing and the use of different brokers for the purchase and sale of financial assets. Spoofing occurs when in the market, or to be precise on the trading book of a particular asset, there are a lot of purchase / sale orders without being executed, because maybe the will to execute and then the bid in cash or letter disappears before the actual transaction takes place.
This technique is not difficult to achieve, as it requires great technical means such as the possibility of doing automated algorithmic trading, perhaps exploiting server-based servers with those used by the stock exchange, to be able to issue orders to very high speed or, as in this case, cancel them according to the evolution of price and quantity formation on the trading book.
It is clear that this can be considered a manipulation of the market, since an improper trader could flood a book of many orders in purchase at different price levels and then cancel these orders just before the actual make a run. This could generate in the other book participants the impression that the price is going to rise. The second practice, on the other hand, requires that the malicious trader has multiple accounts with different brokers.
In this case the "scam" against the other participants in the trading book is bought or sold in several orders using an account, and then transfer the acquired assets to the other account by reselling them at a later time. This technique does not require, unlike the first, large technological means but exposes however to the risk of the oscillation of the price of the asset in the period of transfer from one account to another.
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Source: IQOption blog 2018-05-28 15:30:49
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Thursday, 29 November 2018