Wash Trading in Cryptocurrency
Wash trading in cryptocurrency is a manipulation where the illusion of high trading volume is created on an exchange, which can artificially influence the price of a cryptocurrency.
This usually happens through transactions between related parties or by using automated algorithms that constantly buy and sell assets to each other.
Such actions can mislead investors by creating a false impression of liquidity and popularity of a particular coin.
In cryptocurrency markets, wash trading is common due to the lack of regulation, making it difficult to detect.
Main risks:
🔵 Wash trading can lead to significant price fluctuations, making the market more volatile and unpredictable.
🔵 Investors may make decisions based on false data, increasing the risk of financial losses.
🔵 The involvement of an exchange in wash trading can seriously undermine its reputation, negatively affecting user trust.