In the tumultuous world of cryptocurrency investment, my cousin's experience has been a rollercoaster ride. He mistakenly regarded the main force's selling behavior as wash trading, resulting in an entry with the capital of 200 bitcoins, ultimately ending up with nothing. This painful lesson is undoubtedly a cruel irony of market rules.
Many investors often confuse the main force's selling with wash trading; superficially, they indeed have similarities. Both are strategies employed by the main force in market operations, often accompanied by price fluctuations. For ordinary investors, accurately judging the true intentions of the main force is not easy. In the trading process, retail investors often can only speculate through market changes, while the main force can use various means to confuse retail investors.
Let's compare the characteristics of selling and wash trading in detail:
🌰 Characteristics of selling: When the dealer is selling, they will not place large orders on the sell side but will make the buy orders below appear larger, creating a false impression of strong buying. However, in reality, there is always unsold stock at a certain price level above, or large sell orders frequently appear in the transaction details, while buy orders seem weak, causing prices to struggle to rise and gradually sink.
🌰 Characteristics of wash trading: During wash trading, the dealer will place large orders on the sell side, creating a false impression of selling pressure. At key price points, sell orders appear large, but although buy orders are few, the buying speed is fast, and the number of transactions is frequent, causing prices to stop falling. The dealer absorbs large sell orders at expected price points, alleviating upward pressure; for large buy orders, they will sell off, creating turnover. This kind of fluctuating wash trading can effectively clean up floating chips in the market. During this stage, although large orders are frequently executed, prices neither fall significantly nor rise significantly, presenting a state of balance.
🙊 Characteristics of K-line during wash trading: The K-line chart shows a clear layering phenomenon, with certain key price levels difficult to break. During a decline, trading volume cannot be amplified, while during an increase, trading volume gradually increases. Accompanied by large fluctuations, trading volume shows no obvious pattern, but overall presents a decreasing trend, without a downward shift in the center.
🙊 Characteristics of K-line during selling: The K-line price is out of control, lacking hierarchy, and continues to decline. The rising phase is short-lived, trading volume does not increase, while trading volume significantly increases during a decline, with the price center continuously moving down.
❗ During wash trading, the main force often reduces volume during a decline and increases volume during an increase, as they only use a small amount of chips for wash trading, avoiding letting retail investors pick up cheap chips.
❗ During selling, the situation is completely opposite: trading volume increases during a decline and decreases during an increase. The main force will sell off a large number of chips during a decline for quick liquidation, while during an increase, it is merely to attract retail investors to follow the trend, resulting in smaller trading volume.
Therefore, when analyzing the cryptocurrency market situation, we cannot rely solely on the K-line chart but should comprehensively consider multiple factors. Through careful observation and analysis, we can better understand market dynamics and avoid falling into traps set by the main force.
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