A sudden spike and crash in the market often signals a classic whale trap, where large players (whales) manipulate prices to their advantage. This tactic, designed to attract smaller traders, involves artificially inflating and then depressing the value of a coin to make quick profits. Hereâs how it usually plays out:
First, these whales make large purchases of cryptocurrency, briefly driving up the price. This triggers fear of missing out (FOMO) among retail traders, who then rush in to buy, pushing the price even higher.
When the price reaches the desired level, the whales quickly sell off their holdings at the high price. This sell-off results in a sharp drop in value, leaving those who come in later to suffer losses. By taking advantage of volatility and trader emotions, whales take advantage of smaller players, profiting while others suffer.
