At Quantpedia, we acknowledge that cryptocurrencies offer numerous trading opportunities and include them in the Screener. Yet, each participant should be cautious. Cryptocurrencies are not black or white; they have their pros but also cons. Perhaps now, with all the positive sentiment around cryptos, it is the right time to advert also the cons. It is not that long time ago when we published a blog about the Bitcoin´s price manipulation, where the anecdotal evidence was supported by the Benford´s law which is related to the distribution of leading digits. 

The novel research of Amiram et al. (2020) expands the previous work about the manipulation of the BTC. The authors include a tremendous amount of currencies, study various exchanges, and most importantly, they use more methods to examine the manipulations. To be more precise, the authors utilize the Benford´s law, deviations from the log-normal distribution and the novel machine-learning algorithm E-Divisive with medians that identifies structural breaks in time series. Moreover, they aggregate the measures by computing their principal components. While the results are as always best shown by the included figures, there are numerous practical suggestions. The fake trading benefits exchanges in the short term; however, it is harmful in the long term. Lastly, exchanges with the highest popularity, some regulations and the oldest ones tend to have the lowest fake trading levels.