Ever wonder why Crypto's market is still stuck at under 300 Million USD, even though we have come up with several use case. Few countries for eg Malta has welcomed Blockchain technology and many more are expected to do it in the upcoming days
Then why is the market cap not over 1 Trillion USD?
The answer is it's being Manipulated
Types of market manipulation are as listed below
TYPE 1
Pump & Dump groups ( most common)
P&D groups prey on the most amateur investor to earn their profits
They start with created a group of people who buy a selected crypto all at once
That eventually leads to other outside of the group to buy in excepting the price to go higher
Now the pumpers can start selling it all at once or in small blocks at a higher price leading to a similar drop in price and the later buyers have to sell at a lower price or are left holing bags for months
This is usually found on Cryptopia Exchange
Market Making aka Fake Volume
This usually talks about one or more individual with a lot of Crypto start trading a specific Coin back and forth
Their objective is to bring volume to a coin which is not getting enough liquidity
This is usually found on coins that are newly listed out of ICO's and this activity is not limited to any exchange
It's not usually hard to find Fake volume, as the volume increases all of a sudden without any major news for that coin and the same graphs are reflected day and day again
High Frequency Trading AKA Bots
Very common among the stock market brokers, in fact none of less that 10% of regular trading is done by human intervention among institutional investors
An IF algorithm is created to buy & sell a coin at a certain price
These trades usually don't earn a lot of profit but considering the fact that this is done Thousands of time a day and when the numbers add up leads to a decent profit
The primary benefit is to cut out the Human emotions and conduct thousands of trades in a day
TYPE 2
WASH TRADING
When one or more investor buy and sell simultaneously creating misleading activity on a coin
In stock market brokers often do it to earn more commission
Nowadays many exchanges have been caught practicing this activity to create fake volume so they can attract investor
SPOOFING
When a Crypto whale gives out a large buy or sell order that is never meant to be fulfilled
This gives us a illusion of where might the coin move in the future
Bots are used for this activity to cancel the order just before the market price reaches the placed limit order
Hope we all learnt how to avoid these mistakes and be successful investors