The cryptocurrency market, whether you want it or not, is full of manipulated increases in the prices of tokens, aimed at catching careless traders and investors. We identified the most common scam patterns and developed a strategy of coping in a variable environment of digital assets to avoid expensive errors. Not only that, we even know how to earn on manipulated tokens movements.
Recognition of marked manipulation of market manipulation
Before we delve into what market manipulation looks, first we will discuss what it really is and what is the thought process behind it. Market manipulation in cryptocurrencies consists of intentional actions aimed at distorting the price or volume of the token, creating a false impression of demand or value to deceive traders and investors.
Manipulation is usually focused on increases. Market animators often take over a significant part of the token supply (which is easier in the case of low -volume of rotation coins), thus use the minimum purchasing power to cause rapid price increases, creating the illusion of an organic Momentum.
This clever move brings benefits in many ways. If the market animator is in collusion with people from the token team, it paves their way to get rid of their assets at inflated prices. It also encourages traders to take long positions, jumping on something that looks like a pump that is just starting out, and which will be difficult to stop. Most importantly, rapidly rising prices and volumes create an ideal smoke curtain for market animators, who can get rid of their significant resources at a great profit, often leaving late -shelled ones, when a crash of a given asset is inevitably occurred.
Now, when you know a little more reasons for market manipulation, it’s time to focus on practice. Let’s discuss several relatively recent examples of market manipulation in the crypto industry.
Examples of market manipulation in the world of cryptocurrencies
The first example we analyze is Aergo. As you can see in the chart below, the actions of the tokens grew continuously For over a week, after which they fell by 80% and returned to the previous level. This is market manipulation in the classic Pump and Dump scheme.
We can also look at the valuation of Kaito, which recorded an increase of 223% at the beginning of his listing on the stock exchanges, but in the next month he leveled all this effort and achieved new minima.
Now let’s look at the price chart of the Bera token, i.e. the native cryptocurrency of the Berachain network, where we see a very similar scheme. The price increases systematically until a point, and then … bum! The chart goes back more than creating new ATL.
These are only three examples of what market manipulation in cryptocurrency space looks like. Now that you know what it looks like, let’s look at how the so -called Smart Money can earn on these tokens.
How professionals use market manipulation
The first and easiest way to manipulation used by Smart Money is the massful longing, using the structure of the dead token, which is on its minima. If institutions and other large players see a local change in the structure on such a toxate (MSB on graphics), they immediately cause mass increases to arouse a sense of Fomo among ordinary investors.
The best example of such behavior is the situation on the chart of the Zerebro token from the end of April this year. As you can see in the graphic below, the change of market structure took place on April 22, and the same day the price increased by 133%, while the next day it increased by another 90%.
Going to a lower time interval, we see the same behavior, but much more clearly. We pierced the daily level, again tested the gap after the daily level piercing and quickly continued the increases above 0.09 USD.
The second way in which Smart Money derives profits from manipulated coins is to play for a short time, and as in the case of long positions, the easiest way to do this is also to break out of the market structure. To show this, I will also present a recent example, similar to Kaito tokena.
As you can see in the chart below, the price increased by maintaining a fairly clear upward trend line. On March 3, we lost the trend quite aggressively. What is the next Smart Money move?
After breaking the trend, there was a return to fill the resulting gap. At this point, wise money will look for opportunities to enter a position, which, as it turned out, could even lead to new historical minima.
How to stay safe in the face of market manipulation
The risk associated with trade in tokens susceptible to manipulation is higher due to their ability to a sudden pump, and a tragic, quick decline.
If you take a short position without proper risk management, and the pump will continue, you can lose a significant part of your portfolio and vice versa. Therefore, it would be reasonable not to exceed 1% of the risk of your total commercial capital for each transaction, and always follow the decency of cryptocurrency trading.
Remember that markets can remain irrational much longer than most participants are able to maintain financial liquidity, which is why risk management is the basis for the effectiveness of many investment strategies. Since you are already familiar with the risk that is associated with the trade of manipulated tokens, it’s time to show you how in practice you can earn on them.
Earning on manipulated tokens
Smart Money investors usually derive profits from long and short positions, which are preceded by changes in the market structure. With this in mind, we should theoretically try to recreate these strategies in our own textbooks so that we can profit in the same way. I will try to show you how to do it exactly, using some simple examples for both of these options.
Let’s start with a long position and look at the IP token. Breaking the market structure took place here on February 17. After breaking this market structure, we can see how we have transformed the previous resistance zone into support, and then we started rally towards new maximas.
This time let’s look at the Layer token. As you can see in the chart, something very similar happened here. After breaking the clear trend, there was a break from the old resistance zone. Re -testing as a support has enabled you to take position and head towards new maximas.
Let’s take a look at the token Bera. Here, too, exactly the same happened. Breaking the downward trend, then the resistance turns into support, and then the price is aimed at raping towards new maximas. Do you see this pattern already?
Bera is an interesting example, because a similar example occurs here in the case of a short position. First, we see a clear growth, but then we are aggressively set off into the abyss. After moving down, we test old support, but we are bouncing towards new minima.
The situation is inevitably repeated on the Kaito tokena chart. We are waiting for breaking the structure, we outline the old support that has been lost, and …. We are flying!
If I were to create a control list based on these observations, it would contain the following points:
- Broken market structure
- Broken resistance/support
- Key price levels that will be also profit
- Risk management to position
If you are observing similar patterns on the chart of a token, it is very possible that you are dealing with the manipulation of great capital. The most exposed to manipulations are for obvious reasons new tokens and old memecoins/altcoins – in a nutshell, because this issue is much more complex. If the token does not have a community that actively supports a given narrative and simply grows without any significant declines, it is not an organic movement, but likely manipulation.
Even new tokens listed on large stock exchanges like Binance or Bybit are susceptible to manipulation, because orders are often hidden, which makes it easier for fraud and artificial market pumping market to achieve a better exit target.
A few words of summary about manipulations
Unfortunately, market manipulation in the case of new and existing premieres of tokens remains a common reality in the world of cryptocurrencies, but it is a double -edged sword that experienced investors can use in their favor. By mastering the art of recognizing manipulation – through clear signals, such as rapid growths of altcoins with a low volume of rotation, unnatural price increases without fundamental analysis, or violent corrections after parabolic movements, you can set yourself so as to profit from both increases and declines.
The key to success in this case is a disciplined approach – using breaks of the market structure, aiming at key levels of fluctuations and entering a transaction with strict risk management (never risking more than 1% of capital for a transaction). Regardless of whether you play Longs on the breaking of manipulated memecoins or shorts on growth, the control list is clear: confirm the change in the market structure, verify changes in support/resistance and always protect yourself from transferring.
New tokens on centralized stock exchanges (CEX) and long -dormant altcoins, which are no longer fit into the narrative, are the main candidates for the discussed schemes, which makes them fertile ground for the presented strategy. Approach this topic carefully, be alert and let the market animators play your profits.
Trade wisely and safely.
The text is not investment advice.
