Experienced stock traders have long learned to use programs that facilitate the process of trading. These can be either semi-automated trading advisors, with the help of which you can make the right decision, or fully automated bot programs. So they caught the attention of journalists.
On October 2, The Wall Street Journal published an article about how automated bots manipulate the prices of digital assets. Speech in this case is about cryptobirths.
For those who trade on Forex, trading advisors, bots, robots - this is not news. These programs, as a rule, track the chart of the price of an asset and find the optimal point to enter the market. Fully automated software does not involve the intervention of the trader in the bidding process. It is noteworthy that on traditional stock exchanges (securities trading) such actions are prohibited. So, the New York Stock Exchange regularly monitors the correctness of trading operations and punishes violators.
Cryptobirds in the process of becoming adopted very much from the traditional exchanges. Crypto traders use technical analysis in the same way, attracting software. However, in cryptobirths, robots are not always used for legitimate purposes. The Wall Street Journal believes that automated advisers have usurped cryptobirds and successfully manipulated the price of virtual assets: “Everyone knows about the hard Bitcoin swings, but not everyone knows that unscrupulous traders are sometimes behind this.”
Andy Bromberg, co-founder and CEO of the CoinList startup, told The Wall Street Journal that “the use of trading bots is now flourishing in the market; therein lies the danger, both for investors and for the reputation of the market. ”
The bots strategy in the cryptocurrency market, as a rule, boils down to the creation of "fake" orders. Orders are formed with one goal in order to provide the illusion of a rush around a digital asset. Thus, the price is manipulated in the right direction, deceiving other investors. Fake orders at the right time simply canceled. This situation is hard to imagine on regulated traditional stock exchanges. Back in 2010, stock and futures exchanges outlaw such trading tactics. But on the cryptorinka it is almost the norm.
Malicious strategy forced more than one investor to part with a large amount of money. For example, Digital Virgil Capital hedge fund lost a lot of money at ETH at the beginning of the year due to the actions of competitors' automated trading robots. After that, the 80 millionth fund had to acquire its own bots.
Stefan Qin, managing partner of Virgil Capital, told The Wall Street Journal that the foundation currently uses software bots in many crypto sites. And the main task in this case is to beat the bots of competitors.
A well-known crypto trader Kiethil Eillerten, who has been trading bitcoins since 2011, is confident that the ability to use automated advisors on the crypto market should be made publicly available. And regulatory issues have nothing to do with it.
“If everyone has the possibility of price manipulation, it means that no one will manipulate.”
Chiethil Ailerten himself developed the Quatloo Trader bot program. Advertising said that it is "the best tool for manipulating cryptographic market."
On the one hand, the program simplifies the interaction of the trader with the market by offering built-in tools, which is a generally accepted and completely legitimate practice. On the other hand, the developer himself admits that he added several “manipulative” functions in relation to the price of an asset and called them “whale tools”.
Bots on cryptobirds attracted the attention of New York prosecutors. Attorney General of New York, Barbara Underwood, expressed the view that there were too many manipulations on the crypto market. And at the moment the whole market is very vulnerable and subject to numerous risks, its integrity is in danger, because unfair actions occur everywhere.
This problem is now more urgent than ever, since there are no rules prohibiting manipulative trading and the use of fraudulent trading strategies.
According to The Wall Street Journal, just last week, through various exchanges, $ 90 million of illegal funds were sent to cryptographic markets.
It seems that cryptobirth owners need to seriously think about preserving their own reputation and introduce internal rules and restrictions following the example of traditional trading platforms.