Bitcoin Crash And Price Manipulation Exposed
In the course of a few months various cryptocurrency analysts have been attempting to explain the “sudden rise” and “sudden crash” in Bitcoin. Many have held interesting speculations about Bitcoin being manipulated generating a surplus of conspiracy theories. No one theory was backed by any definitive evidence until today.
Evidence is beginning to emerge on one common theory which is the most popular within the cryptocurrency community. The correlation between the price decline of Bitcoin and Bitcoin’s debut on the Future’s Market. This theory has been validated when The Department of Justice stated its intentions to launch a criminal probe into Bitcoin’s Futures Market’s (Bloomberg 2018). Bitcoin’s Futures are demonstrating a lack in the reduction of “systematic risk”, which has raised the eyebrows of the Commodities Futures Trading Commission (CFTC). This ultimately led to the decision to proceed with an investigation. This comes shortly after the Security and Exchange Commissions (SEC) opened a probe into Initial Coin Offerings (ICO).
Spoofing, is an old technique which involves a single large player or a group of players who issues “empty” orders on the open market driving up or decreasing the price of the underline forcing inexperienced traders to get “burned”. These tactics are monitored by the CFTC and when it occurs parties involved can be criminally prosecuted for violations of trading regulations.
Wash Trades, this occurs when the underline is purchased and sold immediately. Washed Trades are used to manipulate by giving a false impression that the purchaser is buying or selling the underline; when in fact the wash trade reduces the market risk of its user. By using high frequency trades and “washing” positions quickly. When this is used properly its used for claiming tax loss for stocks aiding in reallocation of salvaged trading resources.
The above has occurred in very infrequent and unusual contexts in the Bitcoin Futures Market. Holders (HODLer) are immune to price fluctuations unlike traders need massive price movements to continue to profit. As many have concluded the massive swings in Bitcoins price pattern is very definitive evidence of price manipulation. The trading community in Bitcoin is no longer small individuals looking to make a few extra “Satoshi’s” (.0000001 of a Bitcoin) to HODL. Its now institutional investors who are seeking to increase the monetary value of their institutional trading portfolio.
The cryptocurrency community is very fearful of the outcome many are faced today. The seemingly arbitrary decision to attach Bitcoin a decentralized token to a centralized Futures Market. The hopes of Bitcoin being free from manipulation is being challenged in the eyes of many. Yet, something fundamental must be taken into consideration.
Bitcoin and cryptocurrency technology has an immediate need to be understood by the world.
Cryptocurrency is currently acting as a currency which has a turbulent interaction with the government backed United States Dollar. This constant comparison of two vastly different monetary methodologies is the primary reason why random institutional disruptions can occur in this space.
A select few technologist control the narrative in the cryptocurrency space similar to the monetary space today. This must change for global adoption of cryptocurrencies. Bitcoin and cryptocurrencies have promised to ensure the rights of the everyday consumer; whosoever accomplishes this will win in the race of the third financial revolution. Cryptocurrencies is demonstrating the propensity to accomplish this objective and expose us to a new way of thinking about our monetary system.