😼 [Analysis] Cryptocurrency market manipulation – Kevin Pan

Many suspects that crypto markets are rife with market manipulation as it is highly profitable and oftentimes free of consequences. There are four major ways crypto markets can be manipulated:

1. Spoofing

• Spoofing is to pretend to have an intent to execute a specific trade in order to affect market sentiment
• Oftentimes done with setting large orders that don't get filled and are immediately pulled
• Fake buy or sell walls can drive the price
• Especially common in markets with margin trading

2. Short and long squeezes

• A short or long squeeze occurs when a price is pushed upwards or downwards by a cascade of margin calls
• In cryptocurrency markets, where margin trading is popular and regulations loose, short and long squeeze hunting is common

3. Pump and dumps

• A small group of traders gets a larger group to buy into a crypto which drives up the price and attracts outsiders, then the original small group exits at an expense of the outsiders
• Manifests as a sudden rise in price that's followed by a complete retracement in a short time period
• Often coordinated through Telegram groups

4. Wash trading

• Creating fake trading volume in a market to signal false interest
• Traders can do this by buying and selling amongst themselves to artificially increase trade volume
• Esp. dominant in exchanges with low fees and in altcoin markets