Why Crypto Currency Markets are Highly Volatile

As they say, artificially trying to inflate or deflate the economy so that there are chances of high-frequency changes in financial markets, that could be for personal gains by a group of individual is always haunting the global financial circles. The deregulated nature of cryptocurrency markets makes them be in the high radar of personally influencing the pricing of the cryptocurrencies with rampant buying or mass offloading in several crypto exchanges heavily. The trading platforms are designed by experts who have high analytical and logical knowledge of the price movements of particular cryptocurrencies can program the software, with high-level complex machine language that is highly difficult to be researched by others.

Do Crypto Currency Markets need to be regulated?

  • this has been a topic of discussion in recent years, as cryptocurrency trading is something traded in anonymity for people who are totally new to the trading software
  • the usual assumptions we make in traditional markets will not work in the crypto markets as the requirements are different and specific purpose has to be determined
  • as the pricing is influenced by people in the short term, find out more about how they really do not matter in the long run, all these pricing influences are there for a short while, and then the prices changes due to various other factors
  • many of the investment depends upon the short term, margins based profiting, that will soon be influenced by the very nature of the cryptocurrency being highly volatile
  • as regulations fall in place, the volatility will reduce, the price influences will also become thing of past as there is a high amount of regulatory diligence to be followed

How can pricing be influenced in Crypto Markets?

  • buying and selling their own funds and all by themselves to create an artificial perception that the market is active, is the wash trading that people often use to manipulate in cryptocurrency markets
  • buying a lot of coins and dumping them to traders who have no knowledge about the manipulative tactics are often adopted by a group of people
  • trading outside standard exchanges, to prevent any outsiders, with large capital investors usually trading to avoid any slippage between the same buyers and sellers
  • traders having larger capital base often push the pricing to a direction they want, by using the buy and sell walls usually tend to dominate the prices.