The volumes are screwed up, the capitalization is swollen, what's next?

02 June 2019, Sunday, 00:00 - Edward Xilay
The volumes are screwed up, the capitalization is swollen, what's next?

Exchanges attract daily volumes with the help of bots cheating. The altcoin is not engaged in cheating, but it attracts key players. It turns out that making decisions based on volumes is doubtful.

Everybody knows that the exchanges attract the daily trading volume of with the help of bots. Some exchanges do it less, some do it more, but almost every exchange attracts bots. If a coin has $100,000,000 of daily volume, it doesn't mean that it was bought from a big guy. Developers pay the exchange for visibility. Yet, it works the other way around. Altcoins may have little trading volume if they are traded on the exchange, which is not engaged in bots cheating. But this does not prevent major players to accumulate their position daily on this coin.

I will give an example for Poloniex. In 2016, the majority of Polo's coins had a daily volume from 0.5 to 10 $BTC. Not very often, considering that Bitcoin's exchange rate was below $1000 at the time. Besides, these were real volumes, and they were methodically bought up. In early 2017, the alto season began and all these coins made the x5-x100, depending on the impudence of the pumper. With the increase in prices, the volumes magically appeared at 100 and even 1000 BTC. After, the pumping was followed by delisting, as the wrappers have already been worked out and are not interesting anymore.

What is the outcome? Making a decision based on the daily volumes is doubtful. This also applies to Capitalization, which is swollen and snapped at a click of a finger.



Read Also

Bank of Canada working with G7 on its CBDC

Bank of Canada working with G7 on its CBDC

Litecoin, IOTA, Synthetix Price Analysis: 29 October

Litecoin, IOTA, Synthetix Price Analysis: 29 October

Cardano long-term Price Analysis: 29 October

Cardano long-term Price Analysis: 29 October