Perfect example of Bitcoin MARKET MANIPULATION - how to spot and avoid it

in Project HOPE4 days ago (edited)

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INTRODUCTION

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For many of us, it's not rocket science to know that crypto markets are greatly manipulated. It is easily possible for a few major reasons. For example, the lack of laws and regulations "protecting" investors from such manipulations is definitely one. Another fact is that this is still a small market in which most Bitcoins are not even stored on exchanges (instead are being often held on cold wallets) which in turn results with quite low liquidity.

And that is making it much easier for market makers to move the price of BTC in any direction.

I believe that yesterday we witnessed one such perfect example of market manipulation and today I would like to discuss this topic. I hope that more people would learn how to spot such manipulations and figure out how to protect themselves from falling into bull/bear traps. Which are often set up by those market makers.

WHAT HAPPENED YESTERDAY?

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I wonder how many of you noticed the very strange BTC price and volume action which took place yesterday. A friend of mine pointed this out (respect to you Rene) and asked me about my opinion and my own short-term expectations.

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To understand what happened, please check out the graph above.
Do you see anything unusual? Let me give you a hint. Pay attention to growing trading volumes.

Daily BTC trading volume rose within just several hours from 24mln all the way to 80mln, which is quite MASSIVE. Such daily volumes hardly ever happened last year, even during the best times of the current "bull run".

What is even more surprising is the lack of price movement. It's pretty much STAGNANT. Shouldn't it ring some sort of alarm bell already?

MY FRIEND QUESTION made me wonder

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My friend, who is pretty new to the crypto space asked me how would I interpret that BTC price/volume action? Initially we both seemed to think of it as something positive and we wondered if that may be a sign of a growing demand.

However, things didn't add up in my head.

In such an uncertain time (as we've been going through since the beginning of 2022) appetite for risk is usually low. Investors not knowing what to expect are often just patiently waiting on the sidelines. Uncertainty is something that makes us all quite uncomfortable and buying/selling during such moments are usually lower than average.

So I wondered: how is it possible that volumes grow to such high levels without pushing prices in either direction. Neither up or down?

SEEKING ANSWERS

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The only solution I could come up with which could explain the steadily growing trading volumes (without any sort of price movement) is one: MARKET MANIPULATION.

After all, I can imagine volumes rising which would be caused by some extra selling pressure or buying demand coming out of nowhere.

But if volumes almost trippled and price didn't move, then both demand and selling pressure must have been rising AT THE SAME SPEED.

So ...
considering current uncertain times - I found it very unlikely to happen. What would the possible scenario be? That buying and selling pressure would grow almost 3 times within several hours in similar fashion.

That both demand (buyers) and supply (sellers) would be growing within similar speed. Without having an impact on the price? (almost like changing same hands back and forth).

MARKET MANIPULATION?

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That sounded to me like a clear manipulation. Someone was simply buying and selling from himself/herself. Which didn't really cause prices to move, but it surely increased trading volumes and encouraged some investors to get bullish and become victims of such a manipulation.

I myself felt very tempted to open new positions. Luckily, I decided that I smelt "bull trap" and I closed a few positions instead. Taking profits wherever I could and preparing for a potential downturn.

HOW DID IT ALL END?

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If you're curious on how it all ends, then check out my comment below :)

RESTEEM AND SHARE YOUR VIEW

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I would obviously appreciate every resteem and I will read every comment. So please, share your thoughts with me :)

Yours, @crypto.piotr
@project.hope founder
check out our community: https://hive.blog/trending/hive-175254

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 4 days ago 

and ....

HOW DID IT END?

With big bang! :)

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It turned out to be another "bull trap". One that could be avoided if we would know how to recognize it.

Just have a look not only at price drop, but mostly at rapid (pretty much INSTANT) VOLUME drop.

Market manipulation at its best

I expected nothing else but this.

Greetings @crypto.piotr, valla the truth had not seen that part of the market and I mean the manipulation of this type, the same person supply and that same demand moving the market in even volumes to attract investors and make them lose in the market.

Undoubtedly we must be very attentive to this type of manipulation because we can end up losing everything.

Posts like these help us to clarify or learn many things. I have a lot of growing to do in this world, I would not have detected that trap. I was very surprised to see such a fall. Thanks for bringing this up. Reading the comments also sheds more light and we learn more.

I read this article with great pleasure! I think you caught a perfect example of market manipulation where somebody tries to falsely indicate great maket volume just to bring the price down at some point.

The real question now is: What is happening next? I can not see that somebody just wanted to see the world burn without an intention to profit for himself. that is why I think this maipualtor wanted the price to crash so that they can buy more, right? If this is the case it would be tempting to buy in now?

It was very interesting to read, Great article @crypto.piotr ! :)

Greetings

 2 days ago 

It's a great pleasure to know that you've read it with great pleasure @ga38jem :)

Surely, market manipulations are very common in the crypto space, and that is one of the reasons why increase in traded volume will be witnessed without a complementary increase in price.

You did an excellent explanation of this buddy. Thanks for sharing.

Resteemed

Hello dear @crypto.piotr, no doubt such a move is unusual, such a large increase in volume that does not affect the price certainly gives to suspect but certainly would make many bite the bullet, in the current situation in which large investors are rather cautious, mobilize that volume in a short time should raise alarms, thanks for sharing your opinion and help us to avoid being victims of market manipulation. Best regards!

Greetings @ crypto.piotr
The truth had never been able to appreciate that behavior , very interesting understanding and analysis of the market that you are presenting us. I hope after this to be able to analyze better not to fall into this kind of traps .
It is a total and absolute manipulation of the market to capture more investors and leave it static where few take advantage to generate profits .

It is surprising the strategies that can be used to manipulate the market, I appreciate that you share this valuable information with us, for whom we started in this market it would be difficult to identify this type of situation.

So long, have a great weekend.

I expected nothing else but this.

In my little understanding of trading proceedings, when the liquidity pull is high, there is supposed to be a movement in the price at least a little fraction.

This publication just made me remember a scenario that happened some times ago at my bosses office talking about market manipulation.

I could remember he needed to buy some token and the quantity he needed was huge but he wanted to buy it at menial, all he did was to go on the market, trigger it and few minutes later, traders now came in and started dumping their token at a menial price.

I think that was what exactly what happened yesterday.

 4 days ago 

he wanted to buy it at menial,

What is menial?

Like he wanted to buy plenty with small money

Please sir I want to know if I can resume posting on ProjectHope

 2 days ago 

Can you contact me via discord first @eldecor?

Like i said i cannot access my discord pls can you help out

Like he wanted to buy plenty with small money

Greetings Piotr, thank you very much for sharing this kind of information with all of us. This helps us understand how these types of "bull traps" work that we must flee from. Apparently, given the scenario of market uncertainty, some whales have chosen to carry out this type of strategy in order to make a profit without caring about the damage they cause to the entire trust system of the cryptographic environment.

Hello @cripto.piotr
Thanks for the analysis that you share with us, a great help for all of us who are in the world of cryptocurrencies.
This Trap for bulls is really difficult to detect, I hope to know how to turn on the alerts when I am faced with something like this.
Thank you for sharing this information.
Wishes regards.

I must say that i am learning a lot following your blog on BTC related matters. I myself feels that market manipulation could be at play as lots of coins continues to grow while BTC value remains halted at a position.

Also, i feel this could be a medium to stabilize the market price and the shoot in value of BTC may occur soon

every time we want to do something, we have to find out first what is in it and we also have to find out how it works, the advantages and disadvantages are also very important in something, especially in the crypto world, the point is we must all apply to something that we want to explore.

Manipulated yes...this is what markets do. Market Makers play a big role in this…at the very least to keep liquidity high.

That is why I focus on credit...credit is the biggest manipulator. When there's more of it, markets go up…when there's less of it, markets go down. Large institutions that have the most money depend on credit to trade.

The Federal Reserve is thinking harder about slowing down the amount of credit in the system. So I think we test $30K in Bitcoin…$20K at the lowest.

I don't really know much about crypto trading but if I will bring it down to economics as I was taught in secondary school ( although is not the same but one might share knowledge) what actually affect increased in price of any goods is the demand and not necessarily the supply.
The volume was high yesterday ( increased in supply) but are people ready to buy yesterday ( demand) I was even thinking the price will fall as I was reading the post but it remain almost stagnant.

Now let bring it to normal goods trading (my mom sale) if people start buying a particular product very well and you go to the market to restock if you are not careful the price will increase they will tell you it is not many before we even bring it to Market people has booked everything so they will increase the price because they know many buyers are outside but assuming we stock our shop with a particular goods and nobody buy after one week as a trader we will start thinking that this goods is just holding my capital down let me dispose it out and get my capital back so that I can use it to invest in another goods that will bring me profit and sometimes we sell it at the cost price ( price as fall) just because no buyer ( demand). If it continues for long I think the price will fall and about the manipulation nothing is not possible in the crypto world.

Thanks for sharing with us this information, I've never see like you wrote. First time my brain diverted on this when i read carefully read this. I like to read yours everypost because i learning new and new from yours every post

The fact that a few whales are still able to create such massive volumes illustrates how risk this market is. Glad you avoided that negative wave and protected your money
Luckily, I'm not a day-to-day trader so I don't usually look at daily prices/volumes. That's why I'm partially "immune" to these bull/bear traps.

Your post is a great eye-opener for me...Thanks for sharing

Hello @crypto.piotr This you suggest is very interesting, the relationship between trading volume and price in the market should move if not in the same way but similar. A high volume of transactions would indicate either that the price is about to fall again to start the rise or fall in both to open positions there should be a significant movement in the price which did not happen. This happens with other markets such as real estate where sometimes fictitious transactions are made to hold the assets waiting for the fattening of the same, in this case a matrix of alleged sales volumes is generated and people get nervous and decide to sell their properties at a price well below its value for fear of losing everything and then the rally occurs. Perhaps in the case of BTC in the next few days we will see a change in the volumes and prices of the same.

Hi @crypto.piotr greetings, I am new to this world but I am interested and every day I try to learn something about it, I read a few days ago that the Bitcoin has a double bottom pattern with bearish trap, which was validated in recent days and could lead to recoveries against the first level, $ 45,534.33, should rise above 52,071.27 dollars, which is the maximum of December. I agree with your position, a manipulated market is difficult to predict and to manage, much success and thank you.

Hi dear friend @crypto.piotr

It turned out to be another "bull trap". One that could be avoided if we would know how to recognize it.

I'm glad the story had a happy ending, congratulations you're very smart, I always fall into that kind of trap, thanks for this great lesson I'll keep in mind that when the volumes are high and manipulated it's probably a bull trap

god bless you

this is really amazing, just to think that hypothetically someone made buy and sell trades for himself with the intention of creating a false alarm in the market is already a repulsive idea.

And for people who have very little time working with cryptocurrencies this is very difficult to detect.

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