Cryptocurrency has reached mainstream attention especially in 2017 after Bitcoin has almost reached $20,000. Digital currencies have proven that it is possible to not use any intermediaries for transactions via a public ledger. But of course, there are also key issues along the way. For instance, many regulators are concerned about the possibility of using cryptocurrencies to launder money. In addition to this, there are also concerns regarding price manipulation.
There are those groups or individuals that dump or sell coins in bulk once the target price has been met. In fact, pump and dump is quite common in the world of cryptocurrencies, especially in altcoins given the lack of regulations that control the entire market.
Is Price Manipulation Inevitable?
According to Lon Wong, the president of NEM, he mentioned that price manipulation is unavoidable but will eventually disappear once the crypto market has matured. He said that “price manipulation is not something new. You see it in mainstream markets as well. We are in a very nascent, growing phase of our industry and these things are unavoidable”.
He also added that “Based on that fact, it will be a thing of the past, perhaps maybe when it is more mature. But as far as manipulation is concerned and as far as what we are concerned as NEM, we are more interested in the promotion of our technology than the prices”.
There is an increasing number of cryptocurrency investors that are concerned when it comes to the price of Bitcoin and other cryptocurrencies that are being propped up by Bitfinex. Bitfinext is the largest Bitcoin exchange platform.
Regulators Are Taking a Closer Look
Wong also mentioned that regulators should work in order to prevent these instances from happening. However, many of them are still on a “learning curve” according to Wong. Many lacks in both experience and in knowledge at how exactly they should be regulating cryptocurrencies. In particular, many regulators don’t know the approach that they should take when it comes to crypto exchanges.
He also added that “at the end of the day, we should see both sides of the divide, the exchanges and the regulators, coming together worldwide and coming to a conclusion about how to get to the next step”.
A Closer Look at Tether
A crypto-token called Tether has been alarming many investors as it seems to have been propping the price of Bitcoin. Tether is a virtual currency that is backed by a reserve account linked to the value of US dollars. As for Bitcoin, it is only backed merely by utilization and by what people perceive it to be.
According to reports, some people even think that the reason why Bitcoin’s price skyrocketed last year was mainly because of Tether. So what is Bitcoin exactly worth without Tether? In an anonymous report, it was said that the projected value would’ve been at around $4,500.
Volatility has been the reason why a good number of individuals invested in Bitcoin and other cryptocurrencies. In fact, Bitcoin has already lost half of its value from December up to now. But with the possibility of price manipulation now considered a reality, could this affect crypto prices in the future?