Author: Revc, Golden Finance
Preface
Due to the unrestrained issuance of air coins by VCs in the crypto market, investors can only hide in the "last crypto wealth paradise" - the MEME market. However, some entities in the MEME market have recently been targeted by the FBI for sting enforcement. The US SEC and other government departments have jointly taken action to investigate crypto companies and market makers suspected of market manipulation. Relevant companies and individuals have been charged and have pleaded guilty. The market has been cast a shadow in the short term. How should investors learn lessons from this and identify strong MEME tokens?
FBI sting operation reveals chaos in MEME market
By creating a fake cryptocurrency project NexFundAI, the FBI successfully lured and obtained evidence of participation from market makers such as Gotbit, ZM Quant, CLS Global, and MyTrade MM, which were accused of market manipulation and fraud. The crypto token companies involved include Saitama and Robo Inu, which raised token prices through false propaganda and wash trading and sold them at high prices for profit. In addition, the U.S. Securities and Exchange Commission (SEC), the Federal Bureau of Investigation (FBI), and the Department of Justice (DOJ) jointly took action to file lawsuits against these companies and individuals, aiming to combat illegal activities in the crypto market through legal means and recover illegal gains. This incident not only revealed fraud and manipulation in the crypto market, but also demonstrated the determination and collaborative effectiveness of regulators in combating such activities.
Self-cultivation of leeks - How to identify strong MEME coins
To determine whether a token like MEME is being manipulated or controlled by a strong market maker, there are several clear signs to look for.
Abnormal price stability: Tokens controlled by powerful market makers often exhibit unnatural price stability, especially in volatile markets where most cryptocurrencies experience large swings. This can be due to high-frequency trading algorithms that keep prices within a narrow range.
Sustained high volume: High and sustained volume without noticeable spikes or drops can indicate market making activity. Market makers need volume to make a profit, so they may artificially inflate volume through wash trading (buying and selling the same asset to create the illusion of activity).
Deep order book: A deep order book with a large number of buy and sell orders close to the current price indicates that there are market makers maintaining liquidity. This depth prevents small transactions from causing large price fluctuations.
Price movement is opposite to market trends: If the price of MEME tokens moves in the opposite direction of the broader market trend for no apparent reason, this could indicate manipulation. Market makers may use strategies such as layering or spoofing to mislead other traders about the supply and demand of the token.
Unusual trading patterns: Look for patterns where the price climbs steadily without a pullback or stabilizes immediately after a sharp rise, which could be artificial.
High whale activity: Large trades often involve millions of tokens moving in and out of exchanges, which can indicate whale (large holder) or market maker activity, especially if these trades coincide with price stabilization or manipulation.
Signals before a crash:
Declining Volume: If volume begins to drop significantly, it could be a sign that market makers are exiting, potentially foreshadowing falling prices as liquidity dries up.
Thinning order books: A sudden decrease in order book depth, especially on the buy side, can indicate that support levels are being withdrawn, signaling an impending price drop.
Large sell orders appear: If large sell orders suddenly appear, especially those below the current market price, this may be a signal that big players are preparing to exit.
Price pullback: If a stable coin starts to break out of its trading range without fundamental news to support it, this could be the start of a controlled or uncontrolled sell-off.
High funding rates for futures: For tokens with futures markets, high funding rates can indicate that positions are overleveraged. If these rates begin to fall rapidly, this could signal a correction as traders close their positions to avoid high costs.
Social media and community sentiment: A clear shift in community sentiment, or a sudden silence or negativity from influencers, can sometimes precede a price drop. Market makers may also use social media to manipulate sentiment.
Unusual withdrawal patterns: If the amount of withdrawals from exchange wallets to cold wallets or other wallets suddenly increases, it may indicate that holders or market makers are taking profits before the decline.
Regulatory or legal news: External factors cause the crash, such as a regulatory crackdown or legal issues affecting the token ecosystem.
Technical indicators: Indicators such as the RSI (Relative Strength Index) showing overbought conditions, or divergences between price and momentum indicators, could indicate that a reversal is imminent.
summary
This law enforcement incident once again lifted the fig leaf of the crypto market. Every batch of leeks will encounter their own "Luna and Three Arrows Capital". Currently, speculators are immersed in this MEME wealth feast. Even if they are aware of the problem, they always believe that they are lucky sons and are trying to gain probability.
The above situation also reflects the helplessness of the current crypto market. Judging from the US economic performance, inflation data and other aspects, the crypto market may not have the tremendous liquidity in 2021 in the short term. Back to the asset value of the crypto market itself, the idea of relying on a macro-easing cycle is no longer realistic. In a relatively sluggish period, the entire crypto industry must focus on compressing the core, forging project vitality, cultivating endogenous motivation, and getting rid of capital erosion before it can usher in the dawn.
As for investors, they should master more analytical skills and treat every investment with caution.
