Recently, the Wall Street Journal published an article stating that the cryptocurrency market is dominated by trading bots, which significantly affect pricing and trading volumes. At the same time, over time, the scale of the problem is growing, acquiring a global character. In particular, unscrupulous automated trading techniques such as spoofing and fictitious transactions (wash trades) flourish in the cryptocurrency market. In the first case, the bot piles fake orders, creating the illusion of high market demand / supply, misleading traders. Wash trades implies a situation where the bot carries out buy/sell transactions with itself, creating the illusion of violent activity in the market, as well as artificially inflating trading volumes and asset prices. Both types of transactions are prohibited in traditional financial markets. For example, the New York Stock Exchange regularly monitors the correctness of trading transactions and punishes violators.
Some ardent opponents of the regulation of the cryptocurrency market argue that there is nothing wrong with manipulation, and even openly support this kind of action. For example, trader Kjetil Eilersten believes that it makes no sense for regulators to ban market manipulation. Instead, it is better to provide small traders with advanced tools to manipulate the market. According to Kjetil, this will somewhat equalize the opportunities of its various participants. “If everyone manipulates, then no one manipulates,” he notes. There are also bots, the purpose of which is the trading activity of large companies. So, the managing partner of the hedge fund Virgil Capital, Stefan Keen, noted that for some time his firm was given a lot of trouble by a certain “terrorist bot”, because of which Virgil suffered losses on transactions with Ethereum.
As you know, the cryptocurrency market is not that big and liquid yet. This means that even one such bot can influence the whole market. In addition, bots often play a key role in pump & dump schemes, encouraging crowds of inexperienced market participants to buy on high. Manipulations in the cryptocurrency market are increasingly in the field of view of regulators in various countries. So, last month, the New York State Attorney General's Office stated in its report on the susceptibility of bitcoin exchanges to market manipulation. The agency also sent data on several exchanges to regulatory organizations in connection with a possible violation of laws. *** Automatic systems are not subject to the emotional factor when trading, they are guided only by calculations and well-defined algorithms.
PBXs are able to detect trading signals against the backdrop of market noise and process huge amounts of data that cannot be handled by one person. With the right settings, bots can generate passive income. However, in the cryptocurrency market, as in any other, even unemotional, cold calculation is always associated with risks that can be minimized, but cannot be completely eliminated. Also, perhaps bots are hardly needed by bitcoin maximalists and ardent supporters of the Buy & Hold strategy. Trading bots are not the “Holy Grail”, even the most effective of them need periodic revision of the parameters. In other words, this is not a “loot” button that you press once and you constantly make a profit. If a bot is advertised somewhere that "brings 100500% of the profit", this is most likely a scam.
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