Thanks for pointing that out. I missed that part. Anyway in one report it says that "high-frequency traders did not cause the Flash Crash, but contributed to it by demanding immediacy ahead of other market participants."
Just pointing out that market manipulation might also happen in heavy regulated and established markets with much more stability and trust than cryptocurrency exchanges.
there is an old adage I recall in trading.. "volume justifies price". so if you can sell your shiny new coin for a dollar a token with a billion such tokens outstanding & you can do it with any significant volume then yeah it would be a billion dollar cap coin.
Given the volatility, few if any actual uses, the fraudulent exchanges, crackdown by the SEC, value based entirely on speculation, and not producing anything useful, you're right.
It is way worse than penny stocks, and it is unfair to penny stocks to compare them to crypto currencies.
There are companies offering completely useless software 'solutions' that don't even do their useless task well and many of them have stock prices that have grown 100% + since the bailouts, even if they haven't updated their technology since before then. How is the value of BTC more fake than that?
The difference is that if management of the average publicly traded stock shopped it around, they could probably find a buyer for 50% or more of current market cap. Maybe not for the biggest companies like Amazon and Apple. If a substantial fraction of BTC owners tried to exit, they'd have more trouble getting close to nominal value.
For something like this a metric known as enterprise value is used. Assets - cash + debt AKA the takeover price. You can find these numbers on the company's balance sheet. The average company is traded at something like 3.5x their book value (Assets - debt). The market value of a company is likewise some multiple of their EV.
Unlike penny stocks, bitcoin won't perform a 100:1 reverse-split and print new coins. Many penny stock gamblers have been burned this way, which is why they're moving into crypto
