One of the most daring investments is to contribute one’s hard earned money to a start-up, an untested business idea, through crypto currencies, an ICO. This leap of faith is often based on thorough analysis of the traditional business risks. But the true extent of risks due to previously unknown factors is seldom clear. Moreover, with ICOs storing a chunk of their funds in ETH, the risks affect both investors and ICOs alike. With Ethereum presently near its yearly low, the least & perhaps the most important thing to do as seasoned veteran is to educate oneself!
Market manipulations are as old as markets themselves, even Isaac Newton had famously FOMO’d in and got REKT in quest for the elusive LAMBO-cart! Manipulations to a certain extent can ease volatility in the short term too. This is often done in central banks regulated capital markets. As crypto markets have no broad spectrum regulation yet, they are exposed to suite of conventional and downright criminal manipulations. Unsurprisingly they are the most volatile markets in the world. With our multi-faceted analysis over the past few years, our investigations uncover evidences of manipulations barely comprehensible by any single individual.
TG users must be well aware of numerous pump & dumps operating over various exchanges. Careful analysis even reveals many pumps are timed on low volume coins just as price dips to the 200 moving average (MA). General market price of various high volume coins also reveals reversal of price trend as they drop to their 200 MA, especially BTC over the years. Since algorithmic trading on capital markets by banks and hedge funds are known to make use of dips to 200 MA for well-timed buys, it isn’t far-fetched to expect the same in crypto markets. The low market volume compared to equity markets also helps to amplify the buy as sharp green markets, attracting 2nd tier buyers. This is usually followed by an ephemeral bull run lasting just a few days. Sadly this is where the similarities end and perhaps far more sinister manipulation operate freely on crypto markets. Enter the truly horrifying possible manipulations!
The deflationary token economics of most cryptocurrencies gives heavy first buyers an epic advantage; making them capable of influencing markets by mass selling. They are known as ‘whales’. With adoption of the blockchain/project in question, the coin price rises, indirectly giving the whales higher manipulation powers. This is where possible manipulations get conceivably worse. Institutionalinvestors with much more money and with access to futures contracts on secondary derivative markets can theoretically change the whole crypto market. This is possible due to low sub trillion dollar volume of crypto markets & major projects whose business is yet to start and create organic token/coin demand. With the futures markets, it’s possible to make a loss in the crypto markets but over compensate thanks to futures contract. As a consequence, ICO’s and average investors can thus suffer unspeakable losses in the Altcoin market.
In face of overwhelming manipulations, it is imperative to educate one to buy and sell at right time and above all else ‘hedge’ profits for countering future inescapable losses.
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