WSJ: Crypto prices being manipulated by bots

Bots are manipulating the value of digital currencies on cryptocurrency exchanges, the Wall Street Journal has reported.

These automated trading programs allow traders to operate faster than a human would be able to but setting rules for trades, submit orders and enabling automatic execution. They are not automatically bad, but can be utilised for manipulative ends.

Nevertheless, the WSJ partially blames this “rampant” activity on a lack of regulation in the sector. According to trader Kjetil Eilertsen, who developed market manipulation tool Quatloo Trader, it would be pointless to ban such activities.

He said: “If everybody can manipulate, then nobody is manipulating. You can’t ban anything from people who are dedicated to doing something.”

The thinking, then, is that the more the crypto industry is regulated to stop manipulation and other abusive strategies, the more people will find ways around the rules.

“This sort of activity is rampant in the market right now,” added Andy Bromberg, co-founder and president of startup CoinList. “It hurts the market’s reputation, and it hurts individual investors.”

In May we reported that Bitcoin prices may have been manipulated, with comments from Forbes macroeconomist Peter Tchir saying he’d “be shocked if there wasn’t manipulation of prices occurring”.

“Never forget rule number two of the three rules of Bitcoin – there are no rules!,” he added. “Even knowing that manipulation occurs, whether idictable or not, doesn’t mean I can’t get bullish on cryptocurrencies again, but certainly not right now.”