- Crypto Market Manipulation at a Glance
- How is it Possible to Manipulate the Market?
- How to Prevent Losses in a Market Manipulation Event?
Crypto Market Manipulation at a Glance
The volatility of the crypto market has made it a wonderful candidate for manipulation by the wealthy and the influential. The unregulated nature of the crypto markets adds to the misery of the retail investors who are the top losers and can find no regulatory authority to recover their losses. Market manipulation refers to deliberate influencing of the crypto assets or the complete crypto market by those who have a large amount of crypto assets in their portfolio or a large number of people with adequate amounts of assets in their portfolio.
How is it Possible to Manipulate the Market?
There are a number of ways in which the market can be manipulated. There are pump and dump techniques, wash trading, stop hunting, Whale Wall Spoofing and many more that are used by the manipulators to manipulate the market. But all these techniques are successful due to the emotional content that is put in by the retail investors while investing in the crypto market. Most of the retail investors invest under the influence of a Fear of Missing Out (FOMO) after watching people they know earning millions overnight or viewing fake advertisements of such success stories on social media. This makes them invest in the low cap cryptocurrencies without performing any research and giving the whales a chance to dump the price and profit from the losses of these retail investors.
How to Prevent Losses in a Market Manipulation Event?
The following are the best possible methods that can be used to safeguard you from such market manipulation events and they are:
Keeping the Emotions in Check
FOMO and Panic are your worst enemies in an event of market manipulation and you must always keep these emotions in check and always invest for the long term. Investing for the long term will ensure your immunity against the volatility of the market.
Even if you are a trader and not a long term investor, you must ensure that you double check from multiple resources if the price and volume rise is the same on all the exchanges and avoid using small exchanges that can wash trade to increase their profit. Also research about a low cap project first, to ensure that its price is not extremely prone to manipulation.
Historical Price Trends are Your Friends
Always study the historical price trends of a currency so that a sudden and unexpected behavior in the price can be identified and if such a behavior without any good news regarding the currency is seen, stay away from investing in such a currency.
Always have a diversified portfolio so that manipulation of a single crypto asset does not incur huge losses and a stable portfolio is achieved. Also try to Dollar Cost Average whenever possible as it will help in increasing the profits in the long term.
Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investment.
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