LONDON: Collective puzzlement has reigned among cryptocurrency analysts and traders since bitcoin's dramatic jump on Tuesday, with the mysterious spike shedding harsh light on flaws in a market the mainstream considers too opaque, too volatile and too risky.
Some put the move down to big-scale, anonymous buying that ignited a frenzy of computer-driven trading. Others cited an spoof article suggesting U.S. regulators would give the nod to bitcoin-based exchange-traded funds. But the head-scratching was a reminder, if bigger investors needed one, of dysfunction in a market plagued by problems from thin liquidity and poor price discovery to unreliable data and an absence of fair value for major assets."The challenge is that it's a completely decentralised environment," said Obi Nwosu of the London-based Coinfloor exchange."There aren't tools in place to easily verify the quality of the data.
"These are very nascent markets," said David Mercer, CEO of LMAX Exchange Group, which runs FX and cryptocurrency exchanges.