Bots Are Manipulating Cryptocurrency Prices

According to the Wall Street Journal, bots are manipulating cryptocurrency prices by placing fake orders. These bots post sell orders on exchanges, attracting human buyers with prices just below the market value. Right before a buyer completes a purchase, the bot cancels the order. When used en masse, "spoofing" artificially manipulates market prices by creating supply or demand that isn't really there. The WSJ also highlighted schemes where users would sell stocks to themselves, artificially pumping up prices for a short time. All these practices are illegal in the US stock market, but the cryptocurrency market isn't subject to those regulations.

Some bitcoin supporters who oppose to cryptocurrency regulation don’t consider market manipulation as wrong and openly support it. Trader Kjetil Eilersten developed a program called Quatloo Trader which he bills as the leading cryptocurrency market manipulation tool. He told the WSJ that he thinks it is pointless to outlaw manipulating digital currencies. He said it would be better to provide sophisticated manipulation tools to small traders as a way to level the playing field. If everyone manipulates, no one manipulates, he said. Other crypto traders see manipulation as undermining its adoption.

Well.... durrr.


If this article came out 3-4 years ago, it would be new news.

Well if they openly support market manipulation then there would be nothing wrong with somebody using that same technique to tank the prices down into the single digits. See how they feel about it then.

Quatloo Trader. haha, nice. From ST:TOS episode Gamesters of Triskelion.

Pump, dump, holdagang this isn't news.

If the federal trade Commission starts placing people in jail for manipulating a market that they would have to recognize as a us currency now THAT would be news.

By criminals for criminals.

Technically trading on markets like the NYSE are already done by bots, in microsecond measurements. The difference is the rules of the game.

Don't be fooled, you can't even go up against bots on NYSE. Day traders are just jealous they didn't get into coin manipulation as early as others have.

If I'm understanding the snippet correctly, the bots are just manipulating the bid/ask order book.

This is done in equities all the time. You'll see a huge bid or ask come into the Level2 book and then get pulled right before the price reach it. You can expect to see it when a stock is moving in a defined direction, often a large "order" will appear to try and turn the direction (stop the bleed, etc.) or enhance the momentum, playing with the psychology of the participants. A very common one is what I call the "finger in hole" plug technique, where a massive order will sit at a resistance/support level and get widdled on (sacrifice a few shares) until it's removed and suddenly the price flows like a gyser.

It's not new. It just doesn't work as well with the traditional stock market because of volume on some of the stocks and/or the people involved know to treat it as an NITF order (No Intent To Fill).

BloodyIron said:

Technically trading on markets like the NYSE are already done by boot, in microsecond measurements. The difference is the rules of the game.


Don't be fooled, you can't even go up against bots on NYSE. Day traders are just jealous they didn't get into coin manipulation as early as others have.

Click to expand...

It's the reason I don't usually touch NYSE stock for day trading. NASDAQ is more friendly to traditional human traders with the way the market is setup. There's still bots/algos (I do those too), but it's not as prevelant from my experience.

as if this doesn't happen in all markets

it's called high frequency trading folks

jojo69 said:

as if this doesn't happen in all markets

it's called high frequency trading folks

Click to expand...

Slightly different. More traditional algos will play games with the order book. HFT plays games between the order book and fulfillment. Because the servers are in the same data center as the market (usually, or across the street, like in NJ), they can take advantage of the imperceivable lag of an order. Their positions are only held fractions of a second.

we've been in the mercy of bots forever.
it really is like a casino game

Hehe,.....good.