Crypto-market manipulation

2022 will be remembered in the crypto-industry with big scandals and loud crashes. This year taught us to keep our ears open and simply obliges us in 2023 to better understand how market manipulation happens in general.

So let's not waste a minute. Let's start with simple definitions and examples 👇

✔️ Market manipulation is when someone tries to change the price of a cryptocurrency on purpose.

✔️ One way they do this is by "pumping and dumping". This is when a group of people buy a lot of a specific cryptocurrency all at once, making it seem like more people want it. This makes the price go up. Then, the group sells all the cryptocurrency they bought, causing the price to go down again.

✔️ Another way people manipulate the market is by "wash trading". This is when someone buys and sells the same cryptocurrency over and over, making it look like there is a lot of activity and interest in it.

✔️"Spoofing" is another way people manipulate the market. This is when someone puts in fake orders to buy or sell a cryptocurrency, to trick others into thinking there is more demand for it.

Let's explore several such cases.

1️⃣ Dogecoin Pump and Dump: In early 2021, a group of people on Reddit encouraged others to buy a joke cryptocurrency called Dogecoin to increase its price. This created a sudden increase in the price of Dogecoin, but soon the price dropped, causing significant losses for those who bought it at the higher price.

2️⃣ Centra Tech ICO: In 2018, the founders of a cryptocurrency company called Centra Tech were accused of fraud by promoting an investment opportunity called an ICO. They claimed that major credit card companies supported it, but this was not true. They used famous people to promote the investment to drive up its price, resulting in significant losses for investors.

3️⃣ Bitcoin Cash Hard Fork: In 2017, some Bitcoin miners created a new cryptocurrency called Bitcoin Cash by copying Bitcoin's code. This resulted in confusion and volatility in the market, allowing some traders to make profits by buying and selling both Bitcoin and Bitcoin Cash at strategic times. However, many people lost money in the process because they were not able to time their trades correctly.

As these examples show, the cryptocurrency market can be subject to various forms of manipulation, including pump and dump schemes, fraudulent ICOs, and market volatility caused by hard forks.

It's important for investors to be aware of these risks and to carefully research any cryptocurrency investments before making a decision.