Oh, the one I can see on exchanges are called like this, we can also identify if this act is being done currently on the market, especially on low volume trading pairs, you can observe with just your eyes how the orders are being created/cancelled in a very short period of time.
Most likely what you see is not a whale trying to manipulate the market by spoofing. Its the exchange putting fake trades and fake liquidity to fake volume to be listed higher on coinmarketcap.
Fast moving orders in orderbook may also not be made by "evil whales' trying to manipulate the market. There are many different algo trading strategies that calculate live stream of data and creation of 1 order from 1 algo trader affect other algo trader order making him to move price which trigger other algo trader order etc. Sometimes orders chaice each other jumping all around orderbook.
Any idea why this is still allowed in such cryptocurrency exchanges even it has disadvantages/negative effects?
Because its free world in here. Much better place than regulated markets where such crimes (spoofing) are not captured or captured after years, and you, trader who lost on that ... most likely will get nothing. You have a confusing sense of security that in the end lowers your alertness.
Here you learn about risks and try to avoid them.
Also spoofing is not a always win strategy. One time you push market down to buy lower, other time you just offloaded your bag at loss, that you were accumulating for weeks.
