How ‘bots’ can affect Huobi Token (HT)
Cryptocurrency trading has been plagued by issues of hacking of exchanges, pump-and-dump groups and trading using ‘bots’, short for robots. The last two issues pose a wider market problem that arises from the manipulation of cryptocurrency prices and locking out other investors from obtaining some of these tokens or coins. Huobi Token (HT) recently completed its token issue but users complained on the inability to obtain the Huobi tokens moments after release. Could it be a question of bots buying the tokens?
According to Huobi Pro, Huobi Token (HT) was offered to the public for free through a points based system on 23th January 2018. To receive the tokens, participants in the sale are to purchase Huobi ‘Point Card’ packages at a rate of 1 point=1USDT. This means for every 99USDT participants received 100 points package and 100HT free. The point card can be used to pay for fees on the Huobi Pro exchange.
Huobi Pro official website describes Huobi Token (HT) as a point system based on the blockchain distribution and management. The token is to be distributed and utilized in various circumstances with a purpose to provide more benefits for Huobi Pro’s exchange users and to facilitate the ecosystem along Huobi’s product line.
“The trades were carried out so quick that a simple delay in refreshing the purchase page would make you lose out…”
The point-based system ran for a total of 15 days, with a total of 300 million Huobi tokens distributed. However, during each release, HT tokens were basically getting sold out in seconds. The trades were carried out so quick that a simple delay in refreshing the purchase page would make you lose out on purchasing packages.
Since then, it has been really hard to get Huobi Tokens. Bots are usually used in these kinds of situations, where the coin in question has high demand and high hodling advantages. However, this leads to unfair trades especially when whales take advantage of other traders due to quick and large transactions.
Huobi Token sold out 31 million Huobi tokens in just under 3 minutes on the first day of release and 29.9 million tokens in 1 minute and 40 seconds on the second day. This was impressive by any standards but most investors complained on being locked out of the sale. Questions of ‘bots’ buying most of the tokens were raised by community members in their Telegram and Reddit spaces. The token risks falling into a trap of bot trading which may be good for its short term trades but unattractive to long term trading on the site and Huobi Tokens.
This has happened before to NEO, the Chinese coin offering a platform to form decentralized applications. In November 2017, cryptocurrency exchanges noticed an abnormal pattern in the NEO trades. Prices would hike for some seconds, then suddenly crash and pick up again.
The coin being in a state of extreme volatility and bots trading rapidly, caused a dip from $34.06 to below $4 and then shot back up to $34 in some seconds costing some investors huge losses. NEO has since recovered but if this trend takes up in Huobi Token (HT), then more exchange users and investors may end up losing a big part of their investments in the long term.
The increasing number of people coding these bots mostly form groups on the deep web to create these bots and if you dig deep enough they have groups on Telegram and Reddit. These groups are majorly used to manipulate prices of small cap coins, especially the newer coins that are being publicly offered. An interview on Business Insider with one of these group members explained how most of the investors who enter the “pump-and-dump” groups end up losing to the bot creators.
“The enormous amount of fake volume was misleading traders. Now that a fee applies for each trade, auto-trading bots can no longer function profitably, price manipulation is less pervasive, and volumes have plummeted. Volatility is expected to drop as well.”
– Petar Zivkovski, COO, Whaleclub.
In January 2017, Bitcoin volumes fell sharply on Huobi Pro exchange after the announcement decision to China-based exchanges to end ‘no fee’ trading policies and halt margin lending. This led to volumes traded in BTC and Ethereum (ETH) to slash by over 80% on the Huobi Pro exchange. The exchange was known for its massive presence of bots operating trades on the site. By removing these easy profits, most trades were stopped leading to lower volatility according to Petar Zivkovski, COO of Whaleclub Bitcoin trading firm.
Huobi Pro has been in this situation before and to save its precious token from collapse it need quick reforms on how to deal with these bots. Introducing fees to trade the Huobi Token (HT) may be one of the easiest ways to curb increased trading bots. That is the sure way out for the increasing bot trouble!!
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