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Wealthy and influential individuals, like Elon Musk, can impact the cryptocurrency market through public statements, often causing significant price fluctuations. This influence may not always be intentional but can result in market volatility. Additionally, "whales" (large holders of cryptocurrency) can manipulate prices by strategically placing large buy or sell orders.
Smaller or less-liquid cryptocurrencies are also prone to pump-and-dump schemes, where groups artificially inflate prices and sell at a profit, leaving others at a loss. The decentralized and largely unregulated nature of crypto markets makes them more susceptible to manipulation compared to traditional markets.
Historical examples include allegations of manipulation during the Mt. Gox collapse and studies suggesting that Tether issuance may have influenced Bitcoin prices. While not all market movements are due to manipulation, investors should avoid acting on hype and focus on projects with strong fundamentals to protect themselves.
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