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Wash trading meaning in cryptocurrency. Wash Trading is a way to create misleading or artificial activity in the market, by buying and selling the same financial instruments simultaneously by an investor. It is a form of manipulation of the market.
Created to artificially increase trade volume just to represent that it is in high demand than it actually is. Generally, created by crypto whales.
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Wash trading has been illegal in the United States on Commodity Exchange, but in terms of Cryptocurrency everything is self-dependent and depends on people’s ethics. No regulation till now.
Let us understand What is Wash Trade this way.
For example: Let’s assume a coin valued $0.5 as people who want to buy it set their price to $0.5 and Seller is also selling it at 0.5. Now another guy comes let us call him Wash Trader. Now, he selling some of its coins at $1 from one account and buying the same amount of coin at $1 from another account. He sold some and bought the same. Now, if it is a recognizable amount it reflects on the price of the coin and certainly price will increase. That’s how Wash Trading occurs.
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