Order book spoofing is a manipulative trading practice where a trader places large, non-bona fide buy or sell orders with the intent to cancel them before execution. These false orders create a misleading impression of market demand or supply, aiming to influence asset prices in a desired direction. The perpetrator then profits from genuine orders placed at the manipulated price levels. This tactic distorts true market sentiment.
Context
While traditionally associated with regulated financial markets, order book spoofing has become a concern in the less regulated digital asset exchanges, frequently appearing in crypto news related to market manipulation. The decentralized and often opaque nature of some crypto markets can make detecting and prosecuting spoofing activities challenging. Regulators and exchange operators are increasingly focusing on surveillance and enforcement measures to combat such practices and promote fairer trading environments.
The exploitation of thin liquidity and high leverage on perpetual DEXs creates systemic risk, allowing market manipulation to trigger catastrophic liquidations.
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