CryptoCryptocurrency Trading Problems and Difficulties

Cryptocurrency Trading Problems and Difficulties

Cryptocurrency trading is not based on chance; skill can make a difference. For example, buying a cheap altcoin is a bad idea when it has had a 30% surge in price over the day. 

Inconsistent Or “Knee-Jerk” Regulations

Although cryptocurrency trading has many positive aspects, the lack of regulatory oversight is a major problem. The absence of regulation creates an environment where fraud, scams, and market manipulation can occur. However, despite the lack of regulation, many cryptocurrency exchanges maintain compliance with the latest regulations. Regulators who impose new regulations for digital assets are only sometimes able to keep up with the pace of the cryptocurrency industry. Inconsistent or “knead-jerk” regulations can leave unprotected investors vulnerable. Moreover, cryptocurrencies are notoriously volatile, and inexperienced investors may be exposed.

While CFTC and SEC have jurisdiction over crypto-assets, their current authority limits them to commodity and derivatives trading, which makes it impossible to implement comprehensive regulations. In addition, many U.S. legislators have said that the authority for comprehensive regulation of cryptocurrencies rests with Congress. Nevertheless, legislation has yet to be introduced in Congress.

Triangular Arbitrage

Triangular arbitrage is a strategy that involves buying or selling digital assets on two or more exchanges, sometimes at the same time, to benefit from price discrepancies. The strategy can be profitable if it is carried out correctly. There are several difficulties and problems associated with triangular arbitrage. One of the main problems observed in platforms such as OKX is the low trading volume. It may need more volume on the exchange to meet the required price, and you could end up with a long string of bad trades. It is recommended to use this strategy only if the volume of a coin is high enough, as this could result in delisting. Moreover, the asking price may be more important than the last price, creating an illusion of trading activity. Another problem is that cryptocurrencies have yet to be widely accepted by the general public. This lack of acceptance can result in price discrepancies across exchanges. The cryptocurrency market is in its early stages, and many new exchanges exist. Because of this, price discrepancies are often significant, which can make arbitrage profitable.


Some are concerned that increased regulation of cryptocurrency trading could hurt trading volumes and stifle innovation in this nascent segment. It could also lead some industry participants to seek regulatory relief in less-restrictive jurisdictions. However, tighter regulation can also strengthen the industry by purging it of bad actors and fostering trust. While the U.S. Securities and Exchange Commission has long been focused on digital coins and developers, it’s now taking on cryptocurrency companies and asking them to follow securities laws. Although the SEC did not name bitcoin, the news has sparked a market reaction. Bitcoin fell as much as 10 percent below its psychologically-significant $10,000 level after the statement was released. The proposed regulatory framework would give regulators more authority and curtail substandard practices that have eroded the trust of investors and traders. It also seeks to tailor regulations to specific features of digital currencies. 

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