Mark Cuban, an American billionaire and long proponent of Bitcoin, has publicly shared his opinion on prevailing wash trading in crypto
Wash trading is a method using which the price of a particular cryptocurrency is inflated by conducting high-volume trades
Mark Cuban might be known for his exaggerated comments, but this warning must be paid heed to
Most of which are struggling to have a distinguished use case. Most of these tokens are also having massive trade volumes along with the required liquidity.
This creates a perception of being the next big hit in the industry. However, not all the tokens trading with a stable price have an underlying utilization.
Mark Cuban, an American billionaire and long proponent of Bitcoin, has publicly shared his opinion on the excess liquidity in unknown tokens. Mark Cuban said that the crypto industry is highly volatile after the FTX collapse. And he opined that the next fiasco could emerge because of prevailing uncontrolled wash trades in the industry.
“I think the next possible implosion is the discovery and removal of wash trades on central exchanges,” Cuban said. “There are supposedly tens of millions of dollars in trades and liquidity for tokens that have very little utilization. I don’t see how they can be that liquid.”
Wash trading is a method using which the price of a particular cryptocurrency is inflated by conducting high-volume trades. These trades are often done to create hype in the market and are complimented with excessive marketing. This is an old pump-and-dump technique that enables the major holders to dump their tokens at significant profits.
Even though Mark Cuban does not have any statistical data to support his claim, his concerns about crypto markets are not futile. Hundreds of projects are popping up in the crypto space every day. But the same number of projects are being lost in oblivion to never return.
Investing in a random token only because its price is surging is not a reliable investment strategy. Cryptocurrency and blockchain are crucial technologies that are stepping into the foundations of traditional finance. Right now, we have reached only a fraction of the possibilities that can be achieved via blockchain tech. When markets are fragile, wash trading can severely affect the future aspects of blockchain. Mark Cuban might be known for his exaggerated comments, but this warning must be paid heed to.
Research before investing in crypto markets and visit CoinGabbar. Here you will find reliable information about everything related to crypto.
Also, Read - French Central Bank Governor Advocating for Strict Crypto Licensing
