The principle of “pump and dump” in the crypto market
The crypto market is a zero-sum game. When one trader makes a profit, other traders suffer the same loss. Trading coins and making huge profits from the crypto market also means leaving the crypto market empty handed.
Earnings are also heavily influenced by market capitalization. When a lot of new money enters the uptrend phase, every old trader gets a profit, the profit here comes from new traders’ money. However, entering the downtrend phase is not easy, most small and medium traders experience losses. So where is your loss? Of course, in the hands of big capitalists (shark) and big capitalists (whales) who can manipulate the market to their advantage to make a profit at any time.
After several capital losses following the incredible ups and downs of bitcoin and altcoins, you may start to realize that there is a manipulative whale hand in the crypto market. This article will take a closer look at the signs and ways sharks and whales use to destroy the capital of old traders and attract capital from new traders.
Phase 1: Increase Bitcoin price to attract new fish
Whales don’t make money when the market is full of starving old fish from previous losses. All the fish quickly withdrew their capital and killed themselves. Therefore, the first thing to do at the start of a new cycle is to inject capital into Bitcoin to gain public attention in order to attract capital from new traders hoping to profit from the cryptocurrency.
During this period, Bitcoin strengthened very quickly and strongly, often with tall green columns. Bitcoin, on the other hand, has dramatically broken the resistance level. This causes FOMO (fear of missing out) in outside investors, forcing them to spend money to get into the market quickly.
The rapid increase in the price of bitcoin has encouraged both new investors and existing traders to inject more money into the market. With this new cash flow, the market capitalization is growing rapidly, further accelerating the rise in the price of Bitcoin. Currently the dominance of bitcoin is very high, 10-15% higher than usual, at the current stage around 35-50%. This caused altcoins to drop sharply, cheap whales and sharks started hoarding altcoins to prepare for phase 2.
Phase 2: Increase the altcoin price
At the end of phase 1, the bitcoin price starts to diverge (sideways, neither up nor down or very slightly). This is a good prerequisite for altcoin prices to increase dramatically. During this time, capital will gradually shift from Bitcoin to strong altcoins (such as ETH, LTC, XLM, XRP) and then to weaker altcoins.
Altcoins can increase in price by 10-20% per day and continue to increase for several days until the trader holding the bitcoin feels “good” and jumps in to buy for profits. Around this time, sharks and whales started to profit from altcoins via BTC.
At this stage you will see that it is very easy to earn anything, earn anywhere, buy altcoins and after a few days you will be several tens of percent profit. The first phase in January is the market for this phase 2.
During this time there may also be a Bitcoin Pump like Phase 1 to stimulate the market.
Phase 3: Bitcoin price has increased in the last hour
Why did whales start pumping bitcoin prices last time when they were profiting from altcoins to mine bitcoins? The good bitcoin news continues to emerge at this time, experts are optimistic about the future of bitcoin.
As the price of Bitcoin continues to rise, Whales will be profiting in USD at a very good price compared to the price they were bought for.
Bitcoin reached 19,000 on January 6 and 7 2018 and implemented phase 3.
And if you buy bitcoins during this period, the probability that you will swing higher is very high and you will have to wait a long time to recover your capital if you do not reduce your losses over time.
Phase 4: will lower the bitcoin price for a long time
This phase can last up to several months. Bitcoin price continues to fall and creates new lows, causing swing traders to lose confidence and may decide to cut losses.
Bitcoin and altcoins will enter a long downtrend at this time, the price will decrease gradually, not too much, but continuously and for a long time, which will lead to a significant decline in your account. The bad news released on FUD builds sent the coin price higher to recent highs as sellers cut losses and fled. This is also the time when whales and sharks, having had their fill after the hunting season, with rich pockets will gradually start buying bitcoins and altcoins.
In this phase, Whale will also repeat phases 1-3 but on a smaller scale to continue to collect capital from traders who make the market go down.
Step 5: Repeat from step 1
After a long tiring day due to the Bitcoin crash, many traders may give up and exit the crypto market. Some other traders still stick to the remaining capital. Agile traders using Stages 1 and 2 withdraw most of their capital leaving little in the market.
At this point it is important to attract new capital and at this point the whales decide to repeat a new cycle and start with stage 1 as shown above.
Hopefully, the above sharing from Bitcoin Vietnam News will help people get more informed to prepare for the crypto market battle in the near future.
WARNING: Investing in financial products involves a lot of risk and may not be suitable for all investors. Therefore, please think carefully and check yourself before you decide to link to this website. CryptoViet.com.