Good afternoon! In my blog I would like to discuss the problem of manipulation in the cryptocurrency market. As you know, the cryptocurrency market is not regulated and has no supervisory authorities, so manipulations on it are more common than on other markets. It is especially important for newcomers to the market to be able to distinguish between the natural development of a trend and deliberate intervention, so as not to fall into the trap of a manipulator. I would like to look at different types of manipulation, such as targeted influence on technical analysis and direct interference in trading. Manipulators are not a uniform group, and each of them pursues their own goals.
There are 5 types of manipulators:
1) Large HODLers who believe in the endless growth of cryptocurrency and are ready to hold it for a long time. It is very important for market participants to be careful and aware of the possibility of manipulation in order to avoid unwanted risks and losses. For example, a manipulator who bought a cue ball for $1 can suddenly collapse the market with his 10 thousand bitcoins.
2) Miners, mining pools are people who mine cryptocurrency. They create real empires where they produce cryptogold. They are not interested in speculation and usually only want the price of the cryptocurrency to continue to rise. Therefore, in the event of a major price drop, they will be among the first to take any measures to maintain the cryptocurrency rate. This type of people is often combined with the first type.
3) Large traders are active players in the market who have significant funds to invest. They are usually more experienced and successful than other market participants and can have a significant influence on crypto price movements. The goal of large traders, like other market participants, is to make money through speculation. However, due to the huge size of their deposits, they cannot play with the trend of the market, and they must buy on the lows and sell on the highs.
4) Cryptocurrency exchanges are places where cryptocurrency trading takes place. Since the cryptocurrency market is not regulated, cryptocurrency exchanges have ample opportunities. They have a huge database and see all orders, stop losses and take profits of their users. This gives them the ability to maintain or change the price to their advantage, such as collecting all sell orders or delaying the price increase until the take profit level is reached. It is important to understand that cryptocurrency exchanges are usually the main market makers. If a trader makes money, the exchange loses, and as everyone understands, the exchange will not give its earnings to just anyone. This means that participants must be careful and understand that the exchange may have an impact on the price and their trading operations. This participant is one of the most dangerous, since it is very difficult to detect their manipulations and catch them by the hand.
5) Large investors are powerful players such as international corporations or even states. They have enormous financial and administrative resources. If Apple wants to enter the cryptocurrency market, then with the help of its authority and capital it will be able to significantly manipulate the price of all assets. Example - Google wants to open a good short on the cue ball. The company opens a short position, then buys an article from all the publishing houses in the world about how Bitcoin is a scam - the cue ball will go down at a very fast pace, then the company can spread a rumor that Apple will soon ban the use of crypto. The cue ball will fly down even further, the company will close the short, then deny the rumors and take a long position on the cue ball. I think my analogy is clear.
From all of the above, we can conclude that the last two manipulators are the most dangerous, especially if they work together. The first three manipulators are less dangerous; they cannot collapse the market so much, but they can create certain deceptions during the development of a trend. During trading, large manipulators often negotiate and set up joint ambushes for other market participants. Most of the time, the manipulators fight among themselves, but they are united by one more goal - to shave the hamsters. Don’t be hamsters; when conducting technical analysis, always follow the rules of risk and money management, and also be sure to use stops.
P.S. In the next post I will analyze each manipulation, subscribe!
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