First, let's be clear: most of us enter the cryptocurrency market with one goal in mind—to make money. This is not about investing in revolutionary technology or being loyal to any particular project. People buy assets with the intention of selling them for a profit and moving on. Claims of "superior technology," "innovative solutions," or "impressive funding rounds" are often marketing tools designed to build trust. The cryptocurrency market thrives on trust and hype rather than the inherent value of the technology.
In a downtrend, even the most advanced technologies will see their related assets plummet. Altcoins, in particular, are often nothing more than money games staged by large players ("whales") to generate massive profits. Understanding market cycles is crucial, as they follow a predictable sequence: Bitcoin ($BTC) leads the price surge, followed by Ethereum ($ETH), then top coins, and finally smaller altcoins and trending ecosystems. Let's explore how whales manipulate these cycles to pump and dump coins, leaving unsuspecting participants holding the bag.
Step 1: Accumulation at the Bottom
The first phase of this cycle is accumulation, occurring during the market's bottoming phase. When observing the chart, you can often identify this phase as a prolonged period of sideways movement with low volatility. During this time, whales quietly buy large amounts of assets, often from retail investors who are disillusioned by buying at higher prices. These investors, exhausted from continuous price declines and new lows, capitulate and sell their holdings.
Step 2: Gradual Push
When whales accumulate enough, they begin to push the price higher. But why don't they pump the price all at once? The answer lies in liquidity. If whales sell off their holdings after a spike, the chart will collapse—think of the infamous Luna crash. Instead, they gradually pump the price, creating multiple upward pushes.
During the first wave, new retail investors entering the market start buying due to FOMO (fear of missing out). Newbies tend to chase coins that are performing well rather than buying when prices drop. They panic sell when prices drop 10%-20%, but eagerly jump back in when prices start to rise again.
Meanwhile, some investors who bought during the accumulation phase will seize this opportunity to sell for quick profits, but the whales are prepared for this. They allow the price to consolidate within a narrow range for a time, shaking off impatient traders who lose interest and move on to other trending coins.
Step 3: Exponential Growth Phase
After shaking off the weak hands, whales will initiate the next price surge, often doubling the price. This attracts the attention of those who sold earlier, making them regret their decision. These investors return to the market, often at much higher prices, hoping to ride the wave.
At this stage, other retail participants who missed earlier opportunities also jump in. Media starts reporting on the "skyrocketing" of the coin, further fueling FOMO. People begin to believe that the price will continue to rise indefinitely, and many start consolidating their initial investments with profits in mind. They convince themselves that their entire portfolio will continue to increase.
Step 4: Distribution
As prices reach a euphoric level, whales begin to sell off their assets. They do not sell everything at once; instead, they distribute their assets gradually. Prices may stagnate or experience small declines, but retail investors view these as normal corrections and continue buying. Optimism spreads as people believe prices will recover stronger than before.
However, when the whales finish liquidating their positions, the buying pressure gradually decreases. Eventually, the price starts to decline significantly. At this point, most retail participants have heavily invested, buying near the peak. When the price drops, panic selling occurs, accelerating the decline.
Step 5: The Crash and Reset
With no significant buying interest left, the price collapses, often returning to previous lows or lower. Retail investors who bought at the peak suffer heavy losses. Meanwhile, the whales patiently wait for the reset cycle, preparing to repeat the process.
Key Points
Recognizing Accumulation: Observe prolonged sideways price movements at low prices—this is when whales are accumulating.
Understanding Liquidity: Whales gradually pump the price to create liquidity for the subsequent sell-off.
Be cautious of FOMO: Avoid chasing price surges. Instead, focus on fundamentally sound coins that are undervalued.
Exit before the excitement: When people seem overly optimistic, it is often a signal to take profits.
Learn from Mistakes: Experience is the best teacher. If you have ever been caught in a previous pump and dump cycle, use those lessons to make more informed decisions.
By understanding these dynamics, you can navigate the market more effectively and avoid becoming a victim of the whales' meticulously staged strategies.
DYOR! #Write2Win #Write&Earn $BTC