What is Wash trading?Wash trading in crypto refers to a form of market manipulation where a trader buys and sells the same asset repeatedly to create the illusion of high trading volume or to manipulate the price.
Why It Happens:Market ManipulationIncreased VisibilityProfit through Arbitrage
Risks of Wash Trading:Misleading price signalsManipulated pricesRegulatory issues
Real Life Example:In 2017, it was alleged that Bitfinex used Tether to artificially inflate BTC's price by buying & selling BTC between accounts resulting a false impression of market demand
Conclusion:Wash trading manipulates market volume and prices, misleading traders. Stay cautious and rely on genuine market signals.