Bittrex will Eject 82 Token due to Absence of Liquidity in Small Cryptocurrencies
Bittrex, one of the most significant cryptocurrency exchanges which also powers UpBit, second biggest exchange in South Korea operated by Kakao subsidiary Dunamoo, has declared that it will remove 82 tokens from its trading platform.
The Bittrex team said:
“Occasionally, some circumstances lead Bittrex to remove a coin’s wallet or market from the Bittrex Exchange. We will be removing the wallets involved in the list below on March 30, 2018. Once these wallets are eliminated, we will no longer be able to recover these coins. Users must withdrawal their coins before March 30, 2018, to keep them.”
The Bittrex team likewise reveal that various cryptocurrencies have broken blockchains that have incapacitated clients from pulling out their balance.
“The coins marked with an asterisk (*) have broken blockchains or wallet s that will not allow withdrawals.”
On a top trading platform, it is challenging for exchanges maintain a stable order book if a cryptocurrency does not have sufficient liquidity and demand from users of the platform. The absence of liquidity leads to price manipulation, which can be started with funds as meager as $50,000 has appeared in the recent study done by cryptocurrency trader Sylvain Ribes.
By utilizing a strategy called Slippage – a procedure of offering $50,000 worth of Specific cryptocurrency on a trading platform to quantify its effects on the price. Ribes estimated the liquidity of digital assets on significant exchanges like OKEx and GDAX. While GDAX had a slippage of under 1 percent, on OKEx and other cryptocurrency-only exchanges with a low market cap cryptocurrencies will be selling $50,000 directed to a 2 to 10 percent drip in the market value of cryptocurrencies.
“A bit of wash trading and artificial volume inflation is to be expected in a thoroughly unregulated market. What I did not expect was the magnitude of the fraud. Many pairs, albeit boasting up to $5 million volumes, would cost you more than 10% in slippage, should you want to liquidate a mere $50k in assets.”
Wash trading and price manipulation are required on important trading platforms with little cryptocurrencies or low-volume cryptocurrency pairs. The US Securities and Exchange Commission (SEC) lately caution investors against pump and dump schemes that are often found in the cryptocurrency market.
As per SEC’s statement:
“Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams. These frauds include ‘pump-and-dump’ and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies.”
Prior this month, the SEC asked for cryptocurrency exchanges to either de-list ICO tokens or register with the agency to keep offering support for tokens. For US-based cryptocurrency exchanges like Bittrex, it is obligatory to enroll with the SEC before handling trades involving tokens.
Throughout next couple of months, numerous major exchanges will probably de-list or eliminate small cryptocurrencies that are likely to pump and dump schemes, and market manipulation.