Bitcoin markets are constantly facing various types of manipulation

Bitcoin markets are constantly facing various types of manipulation

According to extensive research by Ilan Sterk, the VP of Trading & Capital Markets, the manipulation on the crypto markets is still alive.


7 Oct 2020 , 18:49 @ Katie Müller

Bitcoin markets are constantly facing various types of manipulation

According to extensive research by Ilan Sterk, the VP of Trading & Capital Markets, the manipulation on the crypto markets is still alive.

Ilan Sterk, the VP of Trading & Capital Markets at Orbs Group and VP Trading & Business Development at Alef Bit Technologies, brings new findings from the field of manipulation in the Bitcoin market. Ilan recently conducted extensive research, which has resulted in the fact that there are still players in the crypto markets who influence the price in order to make money from this event.

Ilan explained the whole situation for Finance Magnates and stated:

As evidenced in my analysis, there are many cases that may be suspected as manipulation,

Ilan also talks about what such manipulation looks like:

it seems that the Bitcoin price is manipulated by sophisticated traders who use several exchanges (regulated and unregulated) in parallel to impact the Bitcoin price by buying or selling huge amounts of Bitcoin in the spot market,

They use this manipulative activity to make huge profits in the derivatives markets of the Futures or Options.

Ilan has been collecting data on the volume of BTC prices from various crypto exchanges for six months, and although there is evidence of manipulation, he emphasizes that he does not suspect that any crypto exchange is involved in the manipulation.

Illan further explains:

in all of the cases that I have reviewed, thousands of Bitcoin were bought or sold within minutes, [even when there was] not enough liquidity in the exchanges to contain such volumes,

Among the first so-called red flags to indicate manipulation is the fact that there are large trades with thin order books on exchanges. The author of the research thus points out that if exchanges that have a lack of liquidity conduct trades with large amounts of BTC, it is one of the signals that indicates that market manipulation is taking place here.

Illan outlines the strategy:

the manipulators exploit the fact that the order book is thin,

They sell massive amounts [of an asset] in the spot market, which has a huge impact on the underlying asset. The asset then fluctuates to the upside (if the manipulator buys huge amounts) or to the downside (if the manipulator sells huge amounts).

This strategy includes several exchanges:

due to the fact that many times there is an increase in futures positions before the dump or the pump. My guess is that traders sell the BTC spot at a loss but on the other hand, make huge profits in options (long put) and futures (short position).

In simplicity, traders who have large amounts of BTC can move prices in the spot market in order to make profits in the futures markets.

The analyst says these are huge gains because some exchanges allow leverage up to 125X.

Ilan therefore warns all those involved in the leverage markets that while this may mean huge profits for some, such manipulation can mean huge losses for the other party.

As for the future, Ilan does not yet think that manipulation will be successfully eliminated in the near future.

Read also: EUROPOL: Cryptocurrencies Facilitate Payments for All Forms of Cybercrime

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    Katie Müller

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