Crypto investor Mark Cuban is predicting an implosion for the market
Mark Cuban feels that a market manipulation tactic could be the next issue facing the cryptocurrency industry
Billionaire investor Mark Cuban has warned of an apparent crypto implosion. The reason for it could come from “the discovery and removal of wash trades.”
It perhaps comes as no surprise that these comments followed the controversy caused by the fall of FTX. The crypto exchange saw billions of dollars wiped from customer funds and then CEO Sam Bankman-Fried is facing criminal charges.
A wash trade is an illegal practice in which investors buy and sell the same financial instruments at the same time to manipulate the market. This can prompt an increase in trading volume which makes the asset appear more lucrative than it perhaps really is.
The crypto market has been battling against the bear market and scandals such as the one involving FTX. This has seen the cryptocurrency industry facing increased scepticism and mistrust in the past year. Investors became wary and this is partly why individuals such as Cuban see some kind of disaster on the horizon.
Speaking with The Street Cuban stated that. “I think the next possible implosion is the discovery and removal of wash trades on central exchanges. There are supposedly tens of millions of dollars in trades and liquidity for tokens that have very little utilisation. I don’t see how they can be that liquid.” Cuban added that “I don’t have any specifics to offer to support my guess.”
According to a 2022 study by Forbes magazine, on 157 centralised cryptocurrency exchanges, more than half of the daily bitcoin trading volume being reported is likely wash trading. Mark Cuban believes that this issue will create an implosion that isn’t a case of if, but rather when.
Work to be done
Despite the issues facing the crypto industry a huge issue stems from people’s understanding of the market. While there are some bad players involved, it would be unfair to brand the whole industry with the same brush. Much of blockchain is still working in its infancy, and as a result this often makes it easier for bad players to exploit the field.
Data from the Blockchain Game Alliance showed that the majority of respondents felt that the biggest misconception about blockchain gaming is that they are a scam. Clearly, there’s work that needs to be done to build trust in the crypto space. Some, like Animoca Brands CEO Yat Siu have spoken after events such as the collapse of FTX stating that while it may be a tougher battle to fight now, work in the space of Web3 must push forward. Gaming is looking to play a big part in showing Web3 capabilities and is projected as the next big vertical.