Story Of The Pump And Dump
It's not the way it looks, especially in the world of cryptocurrency. Investigators from the Academies of Tel Aviv and Tulsa researched the events in 2013 at that time the biggest crypto market exchange, Mt.Gox.
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They found that for 10 months there was a price manipulation that was committed by one or two major owners of bitcoins. So, a maximum of two people is responsible for the price escaping from $150 to $1000.
The manipulations were carried out through the bots called Markus and Willy. In the days when problematic deals happened, about 80 percent of the cost of bitcoin was increasing, while the price grew only 55 percent of the days when there were no suspicious deals.
On days with suspicious transactions, the price generally increased by 4-5% per day, while the price was not noticeably changed for the rest of the day. Similarly, problematic transactions also drastically raised the volume of trading. When the manipulation stopped and Mt.Gox collapsed in bankruptcy, the price of bitcoin also fell.
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This is one of the explanations for why bitcoin and all other cryptocurrencies are so volatile.
As indicated by Bloomberg, 40 percent of all bitcoins are owned by 1,000 people, this is an exceptional concentration of assets. Globally, the percentage of the population owns half of the world's assets, while in bitcoin this concentration is much higher. (Suppose the same for Steem?)
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The second problem is cryptocurrencies, which have low market capitalization and, consequently, small demand. Today, there are more than 300 cryptocurrencies with a market capitalization of between $1 and $100 million, making them highly vulnerable to various manipulations.
Although the volume of the cryptographic market has increased around the world, the number of currencies has grown faster than the total financial aggregate. In other words, this means that there are more currencies that have a small market capitalization, and are therefore ready for sprawling profits and huge failures.
Sources:
Price Manipulation in the Bitcoin Ecosystem
Researchers find that one person likely drove Bitcoin from $150 to $1,000
The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market
Richest 1% own half the world's wealth, study finds
Now you know.
@seckorama
When something seems unusual about the price going up, believe it. It's probably going to drop soon. This theory of mine has proven quite profitable for me.