Are Bitcoin, Crypto Markets Rigged?

When you don't have clear disclosure of buyers and sellers, this is a perennial problem. Who is behind big gains and losses when you don't know all of the players and what they're up to?

That's been a nagging question in the cryptocurrency markets. The U.S. Commodity Futures Trading Commission (CFTC) has opened an investigation into whether some of the largest crypto exchanges are being manipulated. According to Coindesk:

Shutterstock

"According to that report, the government agencies are investigating traders that may have influenced the bitcoin market through old-school tactics such as sending large numbers of fake orders."

Market manipulators have always been present as long as there have been markets. Decades ago the Hunt brothers attempted to corner the silver market (but failed). In the late 19th Century, various "plungers" tried to control railroad stock prices.

Not only are there shenanigans with crypto buyers and sellers, hackers are in on the game. The price of Bitcoin dropped $500 in a single hour last month as the South Korean government announced a possible breach in the crypto exchange Coinrail. That translated into a $46 billion loss in market value for the digital currency.

Although cryptos are designed to allow anyone access to decentralized currencies, they have been attracting hackers from across the world. Hackers stole some $500 million from the Japanese exchange Coincheck in January.

It will be some time before regulators can figure out the best way to address market mischief. Several agencies across the world are working on this problem now.

In the interim, cast a gimlet eye on cryptos, but keep a close watch on the major blockchain developers. The underlying technology behind cryptos may be the big winner, but, like most investments, it may take some time to achieve a solid, sustainable return.

Which companies will be the next Google, Apple or Facebook in blockchain? It's hard to say since the industry is so young. Just keep your powder dry and don't load up on cryptos. The real investments are still out there.

Let's block ads! (Why?)