Tuesday, June 22, 2021

Real Manipulative Whales: The Leverage Exchanges. Ready to get REKT?

The Takeaway:

Crypto traders are inclining towards the margin trade with leverage to increase their profit potential. However, the trading exchanges are entirely capable of flipping the coin in their favor through commencing liquidation. In this article, we have covered the pervasive manipulative moves employed by the leverage rendering crypto exchanges to mold your gains into losses. 

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Crypto industry is one swinging ride where cryptocurrencies hold the wheel, but the investors frame the journey. And it is no secret that these investors or investing platforms possess a strong brotherhood with the manipulations. 


Margin trading exchanges or whales can dip your investments

Margin trading of cryptocurrencies with leverage, though too risky, is a prevalent and profitable technique projected by the trading platforms. The potential for earning high rewards has enticed people to participate in leverage-based trading, and this has what pumped the exchangers to strategize the manipulations. Today, cryptocurrencies’ high volatility has turned into a mode of high profits in a short time. 

I, hereby state a simple arithmetic fact, for you to win, someone else must lose; and Crypto exchanges have acquired the power of controlling the latter more than the former. The play is not as fair as you believe it to be. The mask of being trust-worthy holds a lot of betrayals behind!


BitMEX leverage masks liquidation

BitMEX is undoubtedly the most popular platform of margin trading for Bitcoin and Ethereum. With offering a 100x leverage, the exchange attains exclusive traders; however, what looms behind leverage is liquidation. BitMEX, through its tricky powers, variates the prices and follows the illegal path of manipulations that force the liquidation of funds to evolve its gains. 

During the phase of immense fluctuations, BitMEX system can transform into your enemy. With the highest trading volumes, when traders ought to make rapid decisions, the platform can freeze the users, bounding them from performing any opening or closing moves. The message stating “BitMEX system overloaded” will outshine your decisions, costing you a significant loss on both sides, whether long or shorts. Functional from 2014, this error still persists. You wonder why? Well, as said, focusing on your loss for its win.


Inside traders aim to swipe your funds

Secondly, the insider stop hunt is another suspicious move calculated to be performed by the margin trading bigwig. The illicit act where the inside traders can see your orders and liquidation points is believed to wreck your funds. The exchange, at its convenience, selects the most profitable stance to get you stopped and celebrates a win. 

So, precisely, the trade network, aware of the characteristics of short and long positions, drive price movements to initiate income in terms of liquidation. 

Furthermore, it is speculated that the whale transactions performed are actually carried out by the crypto exchanges to manipulate the market in favor of their interests. 


Rising Artificial trade volume raises crypto risks

Advancing the liquidation manipulations is the illegitimate concept of wash trading, the most conventional, yet so capped. Many exchanges fake the trading volumes to incite or suppress the crypto prices and score the upper hand. KuCoin, the 55th biggest exchange, delisted 16 tokens due to non-profitability and low trading volumes. The story took another turn when the firm was alleged for pumping trading volumes, to sum up, the losses. 

Manipulated dysfunctions function to steal your crypto

Another act of pulling the traders down to loss is through the so-called “tech-issues.”

Kraken and Poloniex, the two crypto exchanges surfaced with humongous liquidation. Although it was considered a severe distributed denial of service attack, many users claimed to be the victims of market manipulation and insider trading. Kraken has been called out for framing vastly variant bitcoin prices. In June 2019, the platform experienced a flash crash in BTC price, from $11,083.9 to $101.2 that led to enormous losses through automatic liquidation. Besides this, the platform is accused of intentional dysfunctionality to ascend profits. Kraken holds the status of initiating technical problems. The exchange is indicted for barricading the users’ move to stop or commence any long or short pitching. 

On the other hand, Poloniex stands under the branch of price manipulations since it disabled BitShares wallets for outgoing transactions as soon the BitShares prices began to rise. Although the network denied any tech issues for BTS liquidation, users stormed with rage highlighting the act of money-making out of sites malfunction.

Margin Trading Crypto with leverage is a highly profitable technique; however, it is accompanied by the same level of risks. As the choices for margin trading are very narrow, we recommend you to proceed with caution and employ extensive research before investing your funds in any exchange platform.  

If you have more information on insider trading or manipulations by exchanges, you can email us at [email protected].

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Ramon AnderSon
Ramon AnderSon
Ramon is a senior market research analyst who is very passionate about bitcoin. He has a degree in Applied Science from Assumption College, Worcester.

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