With the importance of the crypto space and the innovations that are coming up daily, some people attempt to manipulate the crypto market to their advantage.
Crypto market manipulation is artificially influencing the market’s conditions, such as the price of a cryptocurrency. Sometimes, the manipulation may involve increasing the value of the coin or plunging its price artificially to gain some advantage.
Instead of the market being controlled by the invisible hands of demand and supply, some crypto enthusiasts may decide to change the conditions artificially.
As a crypto trader or holder, it is advisable to be able to spot those manipulations to prevent yourself from falling into the traps of unscrupulous elements in the crypto space.
Sometimes, a whale might decide to increase the value of a token because they possess a large amount of that crypto. They may undergo large marketing deals, claim that the crypto project has been acquired by a big name, or do other activities that will increase the token’s value. Once the value of the coin increases drastically, they can sell it to unwitting victims. This is a pump and dump scheme. Pump and dump schemes are one of the common examples of crypto market manipulation.
A group of people may create a token that may have no or little utility. With the token, they can pay people to discuss about the project on multiple social media platforms in an attempt to shill it. As people buy the project, the value increases and the team behind it sells the tokens in large numbers. Once this is done, the value of the coin plummets because the news surrounding the project or the hype around it will reduce. People are then left with worthless coins.