Abstract:

Aim of this study is to document and analyze the manipulative transactions in the cryptocurrency market. With this purpose, manipulative price jumps in the cryptocurrency markets are discussed in two stages. In the first stage of the study, an active account was created within Binance, a crypto stock exchange, and it was involved in pump and dump manipulations working with groups communicating through Telegram. As a result of a series of operations lasting only 30 seconds, a 25% rate of return was achieved. In addition, it has been determined that, these manipulations target young markets with low transaction volumes. Based on these findings, a Jump-Diffusion analysis was applied on Bitcoin price series using 1,162,887 high-frequency observations on Bitcoin price series for the purpose of measuring the reactions of mature markets to these manipulation attempts. According to findings, it was observed that cryptocurrencies gained immunity against manipulations after achieving a certain maturity. As a result of the study, it was concluded that new technologically successful crypto currencies were not in demand due to the prevalence of manipulations. Future work has been advised to be made in the cryptocurrencies on the manipulation-preventing software components.