A recent study done shows that Bitcoin price drops and Volatility is not caused by Bitcoin whales because hardly any of them engage in heavy coordinated selling and trading. In fact, most of the top wallets do not sell out but instead buy in when the price is low so they are not at fault for the massive sell-offs. There is a group of whales that are active traders and they control around 330,000 BTC or about $2 billion. The analysis of the trading activities of these whales has shown that they usually trade against the grain and do not coordinate any massive sell-offs.
So, if its not the whales, what is manipulating the markets? I think there are two culprits to this, the futures markets, especially at places like Bitmex and the institutional investors with the OTC trades.
Spot futures markets like Bitmex allow big players to short-sell BTC without actually owning BTC and allow them to do it in large amounts. Many of the big price downturns happen around the time that shorts increase on the market and the most recent downturn from 6550 to around 6150 was probably led by places like Bitmex. You can see that out of all the places that have the USD/BTC pair, Bitmex is still the lowest and is significantly lower than other places like Binance. The difference is almost $100, which is a significant percentage. This likely means that futures traders at Bitmex are still trying to depress the price while buying pressure from regular buyers at Binance are acting against that. Its a classic case in crypto currency ever since the introduction of futures markets last December of large short-sellers manipulating the market downwards. Its no coincidence that the Crypto Market has gone downwards ever since the futures market was introduced last year.
The second reason are the large institutional buyers like hedge funds who are buying large amounts over the counter(OTC). These large increases in demand do not go over exchanges and therefore does not effect price which makes it cheaper for these buyers to acquire large amounts of Bitcoin through traditional brokerages. Since it takes relatively small amounts of Bitcoin to drop the market price by 4 or 5%, they then can sell a small amount of the coins they acquired to drop the market some and then go via private brokerages again to buy in at a lower price. There is a limit on how much they can drop the price as at a certain point(probably close to $6000) the buying pressure is too high for the coin to go any lower. However, when these institutional investors are done accumulating, they will slowly bring the price up to increase the value of their assets.
These two reasons are the reasons I think that the cryptocurrency market has been so depressed lately.
There have been 2 huge Bitcoin wallet movements within the last few days. Two address each moved more than $100,000,000 in Bitcoin. Some are speculating another dump and others are marveling at how low the fee was to move so much money. One of the two wallets is thought to be Bitfinex’s wallet so that does not raise huge concern as they could just be moving from their cold wallet to somewhere else or vice versa. The other one people are more shaky on as some people think its a precursor to a dump although no one is certain and it could just be whales moving Bitcoins around.
More than that concern was the marvel that it took less than $2 to move over $100,000,000 between wallets. Had that been through traditional banking ways, especially across borders, that fee charged would have been astronomically more, thus proving Bitcoin’s future worth and should put a scare in banks that their method and fee’s days are numbered.
So before I start on this article, I have to say that I do not actually recommend doing this or having anything to do with Pump and Dumps. This strategy seems to work most of the time but it is extremely dangerous to do and you do it at your own risk. You should also not put more than $100 into this strategy at a time because of the high risk involved.
Last time I mentioned Pump and Dumps, I said they were all a scam. That part is still true, but even so, there are certain patterns you can recognize of Pump and Dumps and make money off of them. Generally Pump and Dumps come in 2 or more stages. The initial stage you cannot make money off of, that stage they pump the coin up 400% in 2 seconds, you will never catch this round. After they pump it up 400%, there is usually a period where the coin drops to maybe half of the pumped price. If you want to take this strategy, this is where you buy in(please note that there is always a chance, the coin will just keep dropping to its pre-pump price). Generally after a few hours or maybe a day or two, the pumpers will give the coin a second pump that sometimes even goes above the price of the first pump. You must sell during this second pump and cash in on the profits. Watch the video below as I explain it more in depth with examples there.
Pump and Dump groups try to market themselves as groups that can get you 300% or more within a very short amount of time. It can very tempting to join them for the fast profits they can provide. However, you should never listen to their signals for fast profits because you are much more likely to lose money than to make money if you listen to their signals.
The way they work is, they target a certain coin, usually in the single digit Satoshi range, with no buy or sell walls for a very long time and then right before they give the signal to their public group, they have their whales buy the coin up to 3-4 times its value and then after that they start selling right away as the rest of the group starts buying. This is true for 90% of the whale pump and dumps for any group so don’t fall for them. After everyone else starts buying, the whales then prevent the price from going up any higher by slowly dumping all the coins that they just bought so they get to cash out at the higher price while everyone else loses. These pump and dumps are characterized by a large green bar of volume followed immediately by a large red bar which signals the sell-off by the whales to everyone else they’ve managed to sucker in to the scam. There are ways to play this to make profit but they are very complicated and very unpredictable and you are far more likely to lose money than to make it.
There are several coins on the smaller exchanges where 80 or 90% of the coins are held by a few wallets. The holders of these wallets many times engage in unscrupulous market manipulation to trick new speculators out of money. They generally create two or three accounts and then self trade among the bots to trigger buy or sell avalanches. The actions of these bots are made to get people to panic buy or panic sell and lose money and 90% of people fall for these tricks and lose out in day trading. However, if you spot these bots at work, you can make solid profit by slaying the whales bit by bit if you have the patience and discipline.
First, look for wallet distributions among high-volume coins on small exchanges. If 80 or 90% of the coins are held by a few whales, that signals that there are several enormous whales in play. Second, are the buy and sell orders constantly changing by minute? Small amounts of bitcoins per order and most of the filled orders are only small fractions of a bitcoin. If there are tons and tons of small transactions with huge volume and coins gathered in a few wallets, that could mean the whales are using bots to self-trade among themselves. Third, look at the coin and if it does not follow bitcoin’s pattern and stays consistent with its ratio to bitcoin regardless if the Bitcoin price goes up or down, then that is also evidence of whale bot activity. For many of these coins, 75% of the trading action will happen between two price bands and if you buy in at the lower end of the band and sell out at the higher end of the band, you can consistently make profits. Sometimes the bots will make the coin dip or rise, but you should stay consistent with your buying/selling pattern and doing so will allow you to earn good solid profit. The bot actions are designed to make people follow their moves so when you sudden buy or sudden sell, they make money off unsuspecting newbies. However if you stick to your buy/sell prices and don’t panic, you can solidly slay the whales.
After 3 weeks or more of rampant sell and buy walls due to price manipulation, HTML coin’s walls have finally come down just a few hours after my video calling them out came out yesterday night. What’s funny is that this blog got a lot of visits from the HTML telegram channel so the whale who was manipulating must have realized that other people had noticed his actions. See, scammers and manipulators don’t like to be called out, they like to do their work in secret so once this person was called out(even though we don’t know who it is), he quickly released the wall. The volume of HTML coin also shot up to 4x what it was previously because the wall had been taken down because now without the buy and sell walls, people can see that there might be movement in the markets, which is a good thing. The coin will probably now somewhat follow the movement of BTC prices up and down instead of being perpetually stuck between two walls all the time. If you have done your research and you believe a coin is being manipulated, you should do a blog post or a youtube video to call the scammers out. Once its out in the limelight, it is much harder for a scam to continue. Since the crypto space isn’t really regulated by authorities, we have to regulate it ourselves.