There can be a number of things that one can think of while being in bitcoin trading. However, the most dangerous thing is fraudulent activities involving market manipulation. It is being done by some people to gain unfair gains in bitcoin futures or crypto futures trading. So, in this article, we will try to learn how these activities are done and the steps to avoid these steps.
How it’s done?
There are several methods through which one can be able to be manipulative for the market. One of the prominent ways to do so is by pump and dump schemes. It is done by artificially inflating the prices of the assets in the market. It then creates a false impression of demand in the market. Then, once the prices reach a desired level. The manipulators sell their holdings. As a result, prices start to drop, and others start to lose money.
The second method is through spoofing and layering. In this case, manipulators place large orders for buying or selling with no clear intentions. Then, they don’t do either, and this sometimes results in high prices. Then, in layering some manipulators place orders at different prices. This in turn also causes prices to fluctuate in the market and create a bad environment.
There are also cases in which some manipulators buy and sell the same asset multiple times. As a result, it can create a false idea of huge demand in the market. In the end, this can confuse the traders about the actual situation and can result in bad consequences for many.
How to identify?
There are some ways to detect market manipulation. One of them is monitoring trading platforms. So, if there is monitoring of the crypto trading platform then, false activities can be caught easily.
Another way is to get an idea of market sentiment. It can be done by monitoring social media, news headlines, and several sentiment indicators. All this will ensure that trading is free from manipulation or fraudulent activities.
Steps to avoid market manipulation
There are some ways to avoid market manipulation. One of them is to increase the surveillance of the market. It can then ensure that the fraudulent activities are detected and stopped.
Another point is to strengthen the regulations of the bitcoin trading or crypto trading platform. It will then ensure that manipulators are not able to perform their tricks on the market.
Another point can be to increase transparency in crypto futures trading. it can also improve the trust of general traders in trading. It will also stop fraudulent activities as they can be easily detected.Thus, all this can aid in stopping fraudulent activity. Also, one needs to stay away from such wrong practices. It is because it is unethical and harmful from a crypto trading platform perspective. All such wrong activities result in huge losses and can also affect bitcoin trading in the future. So, it is advisable to stop such activities. It is also beneficial for the bitcoin futures as the trading environment will remain healthy and equal for all.
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