When the banker exploits panic, he not only needs to create the initial source of panic, but also use various communication channels to accelerate the spread of panic. The following are several main communication mechanisms:
1. Social Networks
Social networks have a very high influence and spread speed in modern society. In the financial market, social networks have become an important platform for retail investors to communicate and obtain information. When negative news about a certain coin appears, this information will quickly spread on platforms such as WeChat Moments, WeChat groups, and Weibo.
1.1 Herd Effect
On social networks, the spread of information often carries a strong herd effect (herd mentality). A "retail investor" sharing his panic or selling behavior may trigger resonance and imitation among his friends or followers. This effect will spread quickly, causing panic to spread to a wider range in a short period of time.
1.2 Influence of opinion leaders
Opinion leaders on social networks (such as bloggers and KOLs) have a significant influence on retail investors. When these opinion leaders make negative comments about a certain coin or market trend, their large number of fans will be affected, and then panic and take corresponding trading actions. The dealer may manipulate the opinions of these opinion leaders to achieve their own goals.
1.3 Information Fragmentation
Information dissemination on social networks is often fragmented, and retail investors receive a large amount of unverified messages in a short period of time, which may contradict or exaggerate each other. Since it is difficult to discern the authenticity and reliability of information, retail investors are prone to panic in uncertainty, further exacerbating market volatility.
2. Traditional Media
Traditional media such as television, newspapers, and financial websites also play an important role in the spread of panic. These media usually have high credibility and can quickly attract widespread attention.
2.1 Timing of News Reporting
The market makers will choose to release negative news through traditional media at critical moments. For example, before and after the Federal Reserve interest rate meeting or Bitcoin halving, they will release negative comments or predictions through the media to create market panic. Once these news are reported, they will quickly spread to the majority of investors, causing retail investors to feel pessimistic about the market outlook, thus triggering chain selling behavior.
2.2 Media/Institutional Comments and Analysis
Commentators and analysts from various media/institutions have a high degree of influence in the market. When these so-called experts/professionals publish pessimistic market analysis in the media, it will intensify the panic of retail investors. Market makers may cooperate with media/institutions to arrange the release of these comments and analyses in advance to achieve their own emotional manipulation purposes and further guide the market.
2.3 The amplification effect of negative reports
Traditional media reports on negative news often trigger an overreaction in the market. For example, when an exchange's operating problems are reported, the media may continue to follow up on it, causing negative emotions to be amplified. Under continuous negative reports, retail investors will gradually lose confidence in their platform coins and choose to panic sell coins.
3. Push notifications for market/trading apps
Market/trading apps have the function of real-time information push. When the market fluctuates greatly, these apps will push relevant messages to users in a timely manner. This instant information transmission mechanism plays an important role in the spread of panic.
3.1 Real-time price fluctuations
The market/trading APP will display the fluctuation of market prices in real time. When a certain currency falls sharply, the real-time price changes seen by retail investors through the market/trading APP will directly affect their emotions. This real-time price information will aggravate the panic of retail investors and prompt them to make trading decisions quickly.
3.2 Message Push
Quotation/trading apps usually push market news, company announcements, expert comments and other information. When this information has negative content, it will further strengthen the panic of retail investors. Market makers may use the information push function of quotation/trading apps to guide market sentiment by releasing negative news. For example, by cooperating with quotation/trading app companies, they give priority to pushing certain specific negative news to achieve the purpose of creating panic.
3.3 Social Functions
Users can communicate and discuss on social media platforms. This feature allows negative emotions to spread quickly among users. For example, when a certain coin falls, users share their panic and selling behavior on the platform, which will resonate and imitate more users, further exacerbating the selling pressure in the market.
4. Friends and family around you
Retail investors are often influenced by their friends and relatives, and this influence also plays an important role in the spread of panic.
4.1 Discussions within social circles
When the market fluctuates violently, investors will discuss the market situation with their friends and relatives. Such discussions will amplify negative emotions and cause more people to panic. For example, when a retail investor sells a certain coin due to panic, his friends may be influenced and think that the coin is too risky, and thus take similar actions.
4.2 Group Effect
When facing market uncertainty, retail investors often seek confirmation and advice from their friends and relatives. When the entire social circle shows pessimism, individual investors are more likely to panic and make the decision to sell. Market makers can indirectly influence a wider range of retail investors by guiding the emotions of some key investors.
4.3 Emotional resonance
Investment decisions involve not only rational analysis, but also a lot of emotional factors. When friends and relatives around investors show strong panic, individuals are prone to emotional resonance and make irrational investment decisions. This emotional resonance makes panic spread rapidly on a larger scale.
5. Speeches by politicians
The speeches of politicians have an important impact on market sentiment. Their remarks can often be quickly transmitted to the general investors, directly affecting the short-term fluctuations of the market.
5.1 Policy Statement
When politicians make statements about economic policies, market regulation, international relations, etc., the market tends to react quickly. Market makers may use these statements to influence the market by making arrangements in advance. For example, when a politician makes a pessimistic forecast about the economic outlook, market makers may sell coins in advance, taking advantage of the panic of retail investors to intensify the selling pressure in the market.
5.2 Breaking News
Sudden remarks by politicians often trigger violent market fluctuations. In this case, market makers can manipulate media reports or social networks to amplify the impact of these remarks and further cause market panic. For example, if a senior official makes negative comments about the market outlook in public, market makers can quickly spread the news through various channels to create market panic.
6. Real-time changes in market conditions
Real-time changes in market conditions are a direct trigger for the spread of panic, especially when the market fluctuates sharply, investors' emotional fluctuations will be amplified.
6.1 Sudden Fluctuations
Sudden and large fluctuations in the market often trigger panic among retail investors. For example, if a certain coin experiences an abnormally large drop in a short period of time, retail investors will believe that there is a major negative impact on the market and quickly sell the coin. In this case, the market maker may create sudden fluctuations through large-scale selling to induce retail investors to follow suit and sell.
6.2 Chain Reaction
The immediate market fluctuations will trigger a chain reaction, causing panic to spread rapidly. For example, when an important index falls sharply, retail investors will worry about the overall downside risk of the market and sell their holdings. This chain reaction will increase market volatility and cause panic to spread on a larger scale.
6.3 Automatic Trading System
In the modern crypto trading market, automated trading systems for high market value currencies (such as high-frequency trading and programmed trading) have a significant impact on market fluctuations. When the market experiences abnormal fluctuations, these systems automatically execute large numbers of transactions, exacerbating market volatility. For example, when the market falls sharply, the automated trading system will trigger stop-loss orders, further intensifying the selling pressure on the market and causing panic to spread rapidly.
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