Topic: New report on wash trading scares me - page 2. (Read 691 times)

I wouldn’t like to sound selfish, but the main important thing is if it’s beneficial to the majority. (both me and you). So whatever it is they are doing by manipulating the market, it’s left for us to be very much careful on how we deal with this. This is why some people are fighting for regulation, but trust me, if there should be regulations and government should take over, the it’s probably going to be worst.

I can agree that there are some manipulated volume statistics on certain exchanges for the marketing sake. Exchanges are not that much reliable and better not hold your coins on them.

I see that there is hundred percent some sort of the manipulation going on all the time and this is not going to stop ever. The exchangers are always thought to be bug manipulator of the prices as they are themselves holding big chunks of coins and thus as the users go on buying and selling these coins they make perfect money by getting it from the purchase and selling fees given by the users. Now no one will believe on this fact but lets just see the maths. There are more than 10k users on any single exchanger and they makes more than thousands of dollars transaction every day and thus pour huge money on the exchangers wallets. Why would not they will manipulate the prices if they want to earn more from this. 

You are not wrong! Sure, there are some few manipulations since there are the big whales in any market anyway, but we also have to understand that something’s that can be done in this market and some would go scot free is not something you will do in stock market and go free with it since it is a regulated market and you would not want to do something that would land you in jail as manipulation is a serious offense.

It is no longer news that the market is manipulated in a lot of ways. This is a decentralized space and there is no regulation in place that would be able to put manipulators in check and the big guys are always going to be there to do their thing to make as much as possible.

Nevertheless, there is nothing much to worry about if there is manipulation or not, what is important is that once we start seeing real life usage of bitcoin being used in form of a currency and people start seeing the real value, a lot of things will change.

Wow, thank you for such an interesting link! However don’t overreact so much, i think if we look at traditional stock markets we might see the same thing. May be in lower scale, but if you read financial news and follow the financial markets there are some manipulations that happen all the time. Financial markets including "baby" crypto might try to be transparent, but that will never happen to an absolute extent, as there will always be entities that will try to manipulate the market, following their own benefit.

The price of cryptocurrency in the market will never become stable because there are a lot of people who are selling and investing depending on the situation so you should always expect drastic changes.

Agreed, we may want to hide away from it, or possibly just not decide to pay any attention to it, but the fact remains that one way or the other, the big cats are always around the corner, squashing the small rats. Manipulation is even more prone in a space where regulation is not even available, and everyone is pleased to do whatever they like without any repercussion at least for now.

Some of the things we get to see here are just some things we cannot see in regulated markets obviously. The volatility is still there anyway, but I guess it is still one of the things we will get to contend with for the mean time.

As a matter of fact, it does. I remember this epizode of Silicon Valley, where the team's application wasn't used much, but one character payed people in Bangladesh to simulate usage by making minimum of actions on multiple accounts. Wrong trading volumes deceive people, who then make their own decisions on how much to trade. Incorrect impression about the market might lead to huge disappointments in the future. Moreover, some exchanges are pushing forwards in the charts by providing fake data. What's good, though, is that IMO the suspected exchanges are not the top ones, even though the lists might say otherwise. LBank, ZB, Bibox.. I've never even heard of this ones.

but how much of the trading volume do you think is fake/wash trading?
for example from $2.25 billion is it a small percentage like 1% ($0.02 billion) or it is a large percentage like 60% of it? i'd say it is not big enough to become a concern.

as for Chinese exchanges they were offering 0 fee trading which automatically increases the volume, it doesn't have to be fake. for example you could buy at 5000 CNY and sell at 5001 CNY and make profit but with fee in normal exchanges you should have sold at 5021 CNY and that reduces the number of trades and volume drastically. you still can't call it fake though.

The conclusion is ultimately wrong. Trading volume is a significant data point when considering price movements. Higher volume gives the appearance of more consensus and legitimacy that the price is sustainable. That's why wash trading is potentially an important issue, because if some of the data is faked or isn't reliable, it undermines confidence in the systems.

If a stock goes up in value from $5 to $10 dollars in a single day, that's a huge gain; 100%.  If the average daily trading volume is 100,000 shares and it goes up 100% on a trade volume of 25,000 shares, this is a potentially important data point telling us the price is not widely accepted by the market to be indicative of true value. It could be one trader who is out of his mind or will ultimately be proven to have greatly overpaid for his shares. However, if the price goes up 100% on daily trading volume of 500,000 shares, we now have a 5x increase in average trading volume, which tells us that the number of people who are consensus over the new valuation is significantly higher and the price increase is more likely to hold. In investing, market consensus is pretty important, since the wisdom of the crowd often prevails and the odds that everyone is wrong diminishes compared to one guy.

This is why trading volumes matter. The fraudulent trading volumes by the Chinese exchanges are meant to give the appearance of more consensus and to trick investors into trading more so they can earn more in fees. They are obscuring the risks of investing by hiding what may be far more shallow markets that would keep risk-averse investors away. It is not defensible in any way, and not a small deal.

that is true, being decentralize is more of a dual blade for every user, either you earn when they earn and loose when they loose, what matter is how much you can afford to, it depends on how much we invested, it is a one time punch for the big holders, it is either they hodl the sell big, while small time users never hodl but panic sell instead, while the demand is high but the supplies are low, if being manipulated, we have to take advantage of it. one punch for us, 10x for them, make sense.

This isn't really a decentralization issue because most of these trades happen off-chain. It's a regulation issue, and even then, regulated markets also suffer from manipulation.


I can't speak for him, but he probably meant the $6000 resistance is a byproduct of artificial trading and manipulation, meaning Bitcoin's price should be lower than it currently is. I don't think it really matters in the end (though I'd still want to stop it) but I could see how it could concern traders.

Yeah, that's probably true. I think we're just ignoring it.

We now know that Bitcoin's price was manipulated using USDT at the end of last year (read about it here: https://www.bloomberg.com/news/articles/2018-06-13/professor-who-rang-vix-alarm-says-tether-used-to-boost-bitcoin) but exchanges also faking the volumes... That's just sad.

What do you mean by "stable and mature"?
What are the factors that make a market stable and mature?There's no such thing as a stable market.The markets are always unstable,that's how traders make their profit.I'm pretty sure that a big percentage of the crypto trading is run by trading bots and there's nothing wrong with that.The are rumors about market manipulation and fake trading volumes since the creating of cryptocurrency exchange platforms.
I don't think that anyone can do anything to stop them from manipulating the crypto prices.

you need to know all of these trading activities all have a very high risk and can make a lot of people afraid, the most important thing is that you have to be able to take advantage of cryptocurrency price movements to be able to get a lot of profits.

unless you think it is the exchange itself making the orders and increasing the volume, the Wash Trading is real trading. there are real people buying real coins with real money and paying real fees for each trade.

i think in the end the real question is: does it matter?
in stocks market or even in altcoin market where there are different choices you may look at the volume as an indicator. for instance you may go to a stock that has a higher volume that day. but when it comes to Bitcoin, people don't choose it because it had high volume!

among bitcoin exchanges like the Chinese ones which were reporting ridiculously high volumes it was done for competition so that you choose exchange 1 over exchange 2.

coinmarketcap says trading volume was $4.5 billion. lets say half of it is Wash Trading volume! do you think it would matter if volume was $2.25 billion? you think people would stop investing in bitcoin just because the volume is lower and would invest a lot more because the volume is higher? i don't think so.

The report actually comes with something to ponder about really because it initially provided an overview of what the methodology that is used compared to the current one how its believed to be the right one to bring about transparency to the market. It is not out of place for exchange sites to have be involved in some form of mop up in other to show some view that is different from the actual happenings, to me, its not a determining factor to conclude that the entire market is being manipulated and to give one a need for concern for the following reasons

1. The report only focus on a means of data gathering believed to be truly transparent, but this model has not been generally accepted anywhere to be the right way to go about this. Which means if another research is carried out tomorrow using another methodology, it renders this one useless.

2. I didn't read from the report that a response is solicited from exchange sites accused to be involved in the alleged shady behaviour to hear their own side of the story before going out publishing what its felt to be right which could be as a result of not getting the right information.

I don't think this brings up too much concern. If you look at the list, most of the US based (and all of the major US based) exchanges appear not to be overstating their trading at all according to this. I highly doubt that any amount of fraud by the Chinese exchanges could inflate the price to the point where they are bringing up the rest of the world. Everyone knows not to trust China to begin with, and when you add crypto on top of a general culture of fraud and theft, you have even less reason to trust any of the Chinese exchanges. But boy, look at the suspected over-statements:

• Huobi: 12.5x inflated
• Okex: 19.2x inflated
• HitBTC: 5.3x inflated
• Upbit: 11.0x inflated
• Bitbay: 3.1x inflated
• Coinex: 68.6x inflated

If I had an account with any of these, I'd immediately close it and withdraw all coins. They cannot be trusted at all. But ultimately, I wouldn't be concerned that fraud by these exchanges could tank the whole system. There's enough other major exchanges operating trustfully to conclude that there is a baseline demand for crypto that is sufficiently robust to prevent too much of a collapse.

What a surprise..../s

But looking at the bottom of the page, we see exchanges with a few million in trade and approximate real trade in hundreds of $. 
I'm willing to bet that even the result showing 30% of the current volume being real is too good to be true, I would think it's way below 10%.