Manipulated trading volumes are rampant on some crypto exchanges. Here are three ways to use data to avoid being washed out.
Identifying fake liquidity in Bitcoin (BTC) and cryptocurrencies is essential for traders aiming to avoid being surprised by sudden sharp declines in low volume.
These make it virtually impossible to execute stop losses and usually lead to unexpected results. By analyzing how market makers are organized, order book mechanics, and a handful of practical indicators that can detect artificial volume, traders can spot potential red flags and avoid unwanted consequences.
Market makers play a pivotal role in the crypto markets by providing liquidity through multiple buy and sell orders. However, their activities are not always benign. Those entities might manipulate the market by placing large orders near current prices to create a misleading appearance of demand or supply, known as spoofing, or engage in wash trading—simultaneously selling and buying the same assets to inflate volume figures.
