The price fluctuations of cryptocurrencies hold secrets; one must interpret the intentions of the market makers.

In the crypto market, the price movements often conceal the intentions of the market makers. For ordinary investors, understanding the operational logic of these market makers can help better grasp the market rhythm and avoid being taken advantage of.

1. Common tactics of market makers

• Wash trading: Creating market panic or greed through price surges or drops, aiming to clear float positions or attract retail investors to follow the trend, completing the process of buying low and selling high.

• Baiting for excess: Using false breakouts or breakdowns to guide market sentiment, causing retail investors to chase highs or cut losses, while market makers take the opportunity to operate in the opposite direction.

• Controlling and lifting prices: In highly controlled cryptocurrencies, market makers quickly raise prices with a small amount of capital, attracting retail investors to chase after rising prices, and then offloading at high points.

2. How to identify the intentions of market makers

• Abnormal trading volume: When there are no clear positive or negative news, a sudden increase in trading volume may indicate a test buy or distribution signal from the market makers.

• Candlestick patterns: Continuous long upper and lower shadows, along with violent fluctuations, often indicate wash trading by market makers.

• Market sentiment: During extreme greed or fear, market makers often take advantage of the situation to operate in the opposite direction.

3. Coping strategies

• Avoid chasing highs and cutting losses: Stay calm and do not blindly enter or exit positions due to short-term fluctuations.

• Set profit-taking and stop-loss orders: Ensure trading discipline to avoid being forced into holding positions or liquidation due to market maker actions.

• Build positions gradually and diversify investments: Reduce the operational risk of a single cryptocurrency.

Summary:

The price fluctuations of cryptocurrencies often conceal secrets, and while it is difficult to fully understand the intentions of market makers, by observing trading volume, candlestick patterns, and market sentiment, combined with a sound strategy, one can reduce the probability of being taken advantage of and achieve more rational trading.