I remember back in the day when I was into trading and after a while realized that I did best when I traded as little as possible, preferably during short time periods when everything and their grandma's token would pump. Back when Binance and other exchanges would allow anyone to create as many different accounts as possible and they had just introduced futures trading which was riskier and dumber of me to get into. I thought to myself, okay, I'm seeing all the buys and sell orders go through, yet it's almost never going in my direction, why is that so? It wasn't really just about that but it got me to thinking deeper into the process of what these exchanges and tools made possible.
Doing some trading here on our small layer 2 exchange kind of also reflects how it is for certain people in power to manipulate markets to their will. Certain tokens have very little liquidity so if you really wanted, and the ease of making alt accounts and obfuscating the trace of the transactions, you could with not a lot of money play around with some of these tokens to move them up or down. I haven't really put much thought on that part but I imagine it's pretty similar and easy for whales to do the same, and even worse, exchanges themselves.
After the shitshow of FTX, you really ought to think what those doing things better and less chaotic might be doing on a daily basis. Of course they'd never admit to it and most of them are going to take that activity to the grave, but the possibility is still there. As an exchange, especially one of the biggest ones in the world you have a lot of power and possibilities to do things, and when you can get away with it many will often take that opportunity. You'd think they should be happy with the fees they earn from trades, the costs of becoming listed or giving away stake to them, etc, but I'm pretty sure some of them think "why the fuck not?" because that's kind of the world we live in these days.
Either way, the idea popped up in my head that when trades are occurring it's not as black and white as exchanges may make it seem. Many of them give people tools to trade with like open API's to their accounts allowing for self-created bots to trade back and forth, you really ought to think how much of that massive daily volume is real and how much of it is just Binance trading back and forth with itself.
Think about it, if they own the exchange they have so much info on everything going on there, who do these buy orders belong to, who do these sell orders belong to. Who just made a deposit, what did he do last time with the deposit of token x, what may he do this time? Especially with AI and analytics being on a completely different level these days they may know more about your trading behaviour and pattern to predict what's going to happen with your balance better than you do. Aside from trying to be unpredictable to prevent these being used against you, it's still not in your favor as bots and actions on a centralized exchange can happen faster than you can click a button and that action going through.
People say futures and margin trading are risky due to the high margins costing you higher fees and leaving less room for error, but I'd say there's way more risk involved there from exchanges or whales trying to take the money you've put into those positions. Now I'm of course not accusing the biggest exchange in the world of doing so, I'm just saying there's a possibility and we can't know if that is 0.
Imagine it's only a few months until the Bitcoin halving, there's only been good news coming out towards the crypto sphere and BTC itself. Institutions and banks literally announcing they're going to be purchasing it (just as an example) so you start opening up long positions in hopes of making 5-50x more profit than just buying and holding BTC in spot positions after sending it to your custodial wallet (of course). You check the stats they provide you with, everyone else is long, this is failproof you think to yourself. Who needs stop losses, no one is that stupid to sell into these news and upcoming supply shock. You then go for dinner or sleep and wake up to an email letting you know your position has been liquidated. What happened?
Well, a lot of things could've happened. They could've wanted to take out those kneejerk longers that put in positions recently or had too high x on the margin loans. They could've sold actual BTC on spot just to cause the market to dump on the futures as well, partly to take out longers, partly and maybe more importantly to fill up their own long positions a little lower. They could've traded from one account towards their own accounts, practically selling close to none of it off but giving the illusion that a lot of selling is occurring causing others to sell into their buys. Worst of it all, it could just be exchanges creating fake but in a way real orders they don't really lose anything on fees on because they are the ones who earn the fees.
This is something that also came to me during the NFT hype, so many of the projects if you only spent a little time you could track how most were coming from new and unused wallets being funded through exchange deposits and buying up nft's to give you an illusion that there's a lot of interested buy volume. Along with fake followers on web2 and fake accounts on discord aside from a few fanboys hoping their 0.05 eth investment will 10x in the next month or cause being active on discord meant you get a cool role and maybe a free nft. You were basically being used to scam others and most likely yourself if you value your time.
Point of this post is to question everything, the things this technology allows and makes possible through anonymous wallets and transactions it's really not that difficult to get away with these scams that are only looking to make a quick flip and leave you holding valueless "art" if you wanna call it. Will talk another time about the generative nft hype which I think was utterly disgusting and set back real art on web3 years and left them high and dry. Similar to trades, where good traders only look at how much out of all their trades they've profited instead of just trying to always be right, the same thing goes for these flip attempts. It doesn't matter how much they paid an artist to generate the artwork on these projects, it doesn't matter how much they paid in fees to fake volume and interest, even if they only profit an eth or two, they will keep doing it and that's one of the reasons this space is full of this shit and it will keep staying that way as long as we keep feeding them.
Luckily we haven't seen much of that here on Hive in the nft scene, mostly cause there's no real big volume here but I prefer it this way. On hive-engine there's quite a lot of arb bots but I haven't witnessed any manipulation attempts other than whatever that was that happened to that football trading card game from a few shitty actors.
Another great thing about Hive is that we can discuss and alarm others when we suspect foul play or shady activity and they'll be able to see and determine it themselves compared to the things that happen on web2 where you're either silenced, blocked or just hidden in the masses.
