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arsalaan
Wash Trading In Crypto.
lhorgic
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2024-08-04 15:31:15
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Hi friends! how are you doing? Welcome to my blog, it's super good to have you back here. I trust you got value from my last post. I bring to you another interesting content, one that I believe you would find interesting as usual. In my previous post, we explored the concept "P2P Bridge", you can check out my blog to read through if you haven't.
Today, we would be looking at **Wash Trading** in the crypto world... it's actually another topic of interest I feel y'all should be enlightened on.I hold the belief that many of us ain't familiar with it. Anyway we are going to delve deeper into in today post.
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The advent of crypto is such a huge blessing to us, no doubt. I mean quite a number of us on this space have enjoyed so many benefits dealing with crypto. You know this space is so wide, having so many branches that you can profit from. One of the best investments one can do is investing in cryptocurrency.
But then, there is this dent about this space and that's the manipulation that exist in here especially in the aspect of trading (buying and selling) these coins. There are folks in here who are exploiting these activities for their personal and selfish interest, this they do at the expense of others hard earned money. One of these manipulation is what we want to look into today.
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Wash Trading is a manipulative activity carried out by an individual(s) entity or group of people who initiate both a buy and sell trade in order to create an illusion about the crypto/token they are trading just to lure investors into buying that same cryptocurrency after it must have increased in volume and value.
It can be referred to as a fake transactions because the money used in buying and selling goes to the wallet of the same owner. I mean the wallet of the malicious players but then their activities impacts on the price which make unsuspecting investors hop in on the bait which is clearly unknown to them. This is why this activity is highly illegal
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Naturally, investors would love to trade cryptocurrencies that are highly liquid and that what these guys leverage on to lure them in. However due diligence would help spot Wash trading, that is if you do your research well. Wash Trading is actually a very primitive kind of manipulation which have been banned on all traditional market.
The reason why it still thrives on the crypto market is because it's not regulated here. So many things happen on this space and goes unchecked because of the poor regulation system that is in place here. Another sad reality is that some dubious exchanges partner with these folks to carry out wash trading.
I think it's also important to mention that wash traders do lose some money while trying to carry out this plot such as transaction fee and a some other related fee but then they are less concerned about it because of the ultimate goal which they plan achieving at the end of the plot... I mean cashing out from the market.
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Yeah! There is an ultimate plan with the buying and selling in succession carried out by these folks. After the coin had been artificially pumped, such that the volume and the value has significantly increased, they wait for investors who by this time must have been lured in due to the level of liquidity they have spotted on the surface without knowing what has transpired behind the scene...
These are the very folks they cash out with because they are coming in at the very wrong time, buying at the top. These folks dumps these token in the market and crash the price big time cashing out heavily and making the coin worthless. And boom! Another successful manipulative attempt has just been carried out.
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There is this historical record of Wash trading that captured the sale of a particular NFT called Punk 9998 in October 28, 2021. It was sold for 124k ETH which is equivalent to $530 million. This particular NFT art was bought via a flash loan contract with money and the loan was repaid shortly after.
This transaction seems to draw some attention which of course wasn't sending the right signal. Many deemed it to be some form of money laundering activity. From the look of things, it didn't look like the NFT was actually bought, it was just some foul play to drive up not value.
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Many in the crypto space hold the belief that most Bitcoin trades are wash trade and that doesn't exclude many of these NFT's trading volume we see around. This is the very reason why we need to be very careful, we shouldn't skip due diligence in dealing with any coin or token that catches our attention. We might just end up a victims of wash trading if care is not taken.
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I believe by now we understand what Wash Trading is and how it operates. What a good way to be incentivized for prioritizing eco-friendly environment. You might also want to explore this niche for your profiting.
As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.
Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!
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**Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.**
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Regards
@lhorgic♥️
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