December 10, 2023

Whale games: who is manipulating the cryptocurrency market rate”/>

Whale Games: Who Manipulates the Cryptocurrency Market Rate"/>
Manipulators-whales: how to artificially overvalue cryptocurrencies

On November 5, the price of a little-known cryptocurrencyParallelCoin (DUO) rose 4,000 times in 24 hours, and as a result, DUO, which was worth $1.5 at first, suddenly rose to $6,000.The quick return to the original price convinced market participants to apply the pump and dump scheme.Despite the warnings of experienced market players, traders continue to lose money due to gameswhales – adherents of the tactic of "pump and dump".  

How Whales Play the Market and Hamsters Lose Funds 

Pump and Dump schemes have appeared in the financial markets for a very long time.The goal is to artificially inflate the price of an asset and then "dump" it in order to make a profit.Similar incidents have been repeatedly disclosed by the U.S. Securities and Exchange Commission (SEC).But a "transparent" stock market is one thing, and the situation with digital currencies is quite another. 

Whales choose two winning tactics: 

  • Traders  panic and startKitquietly buysassets at a depreciated value. 
  • The illusion of a market crash.Large orders with a low price compared to other orders.Traders expect a decrease in the rate by buying cryptocurrency.Demand is rising, and whales are selling assets at a high price.  

Both strategies are disastrous for "hamsters" – inexperienced traders who do not know how toRecognize manipulators' games. 

Bitfinex's Bad Luck: Tether Manipulation Will Lead to Lawsuits      

On October 3, Bloomberg published an article inwho accused Tether of manipulating the course. Scientists at the University of Texas conducted a study that revealed the following pattern: in 70% of cases, the issue of USDT cryptocurrency coincided with an increase in the Bitcoin exchange rate.

A similar conclusion was made by analysts at TokenAnalyst.According to the analysis, the Bitcoin rate is growingon the days when USDT tokens are emitted – 19 out of 27 cases.The researchers drew the attention of market participants to potential manipulations. 

Bitfinex  representatives reacted aggressively to the accusations: 

"We expect that this profoundly flawed article will be used by opportunists to file lawsuits.Perhaps this is its purpose.We will not be surprised if there are lawsuitsIn anticipation of this, we want to clarify our position: any claims based on this article will beare regarded as a shameless attempt at extortion."

So, in 2018, the platform was accused of the fact that USDT is not linked to the dollar in a one-to-one ratio.In this case, the exchange contradicted its own official document – the White Paper.     

Altcoins and Telegram are a suitable duo for artificially inflating the price

The growth of the ParallelCoin coin rate was not surprisingexperienced market participants. So a user of the social network Twitter, Bitlord 01, recognized the scheme immediately. Manipulation was indicated by the lack of any information from the coin developers. It is much easier to manipulate little-known tokens because they are inexpensive and not in demand. Messengers (for example, Telegram) help with this, where you can anonymously attract the attention of investors and gather participants. All participants are informed that they must buy a coin at a specific moment. After such activity, the exchange rate, of course, grows. Then the participants sell the asset at a high price, and the price goes down sharply.   

Experienced traders rarely become victims of gameswhales Participants check information about each coin. Find the official pages of the exchanges to find out about the upcoming listing. Another important point – whales have a difficult time with those who do not succumb to primary emotions. It's useless to play here.