The close correspondence is striking for such a reasonably little data set. Figure 2 compares the distribution of the leading digits of the cost of Berkshire Hathaway stock given that 1980. Again, bitcoin market manipulation is not ideal but reasonably close. Benford's law is more than simply a surprising relationship; it can also be used to spot fraud.
However, if it is a scenario where Benford's law holds, there need to be more 1s than 2s, more 2s than threes, and so on. Considering that a company's income, costs, earnings, and other steps of financial performance are likely to grow in time by percentages, they must be governed by Benford's law.
It can likewise be used to discover fraudulent bitcoin trades so-called wash sales where a group of conspirators trade bitcoin back and forth among themselves at ever higher rates. Because increases in bitcoin rates are likely to be multiplicative, they need to be governed by Benford's law. They are not. Figure 3 shows the circulation of the leading digits of everyday bitcoin costs back to 2014.
I saw this and I resembled, well, yeah, isn't all bitcoin usage either crime or control? However then I realized, no, that's not all of it. Some bitcoin playas are inspired by politics, some by fomo, some are doing anti-virtue signaling (it's the financial investment equivalent of rolling coal), and others are just betting for enjoyable.
Some concerns were raised in comments. If you're even more thinking about the topic, you might check out the paper by Cong et al. linked above.
This article clarifies the common manipulation techniques in the cryptocurrency world, it will educate readers on finding common patterns and analyzes the Bitcoin drop on July 20th, 2021. Intro, Market adjustment has actually existed for as long as tradable assets have existed and cryptocurrencies are no exceptions to it.
In this article, I will dive into a few of the typical market adjustment methods, determine patterns around it and gear up people to identify violent behavior. There are many forces at work every day in the crypto markets targeting cost adjustment to spook novice investors and inexperienced traders to panic and play right into the hands of these manipulators.
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