# Understanding Crypto Market Manipulation and Funding Fees
#ckb #gainers
As you may have read (or unfortunately been affected by) the insane large funding fees of $CKB , let's examine why the suspicious and unexplained sudden rise of coins doesn't necessarily mean you should short the sus coin right away, and why it's important to check funding fees, open interest, and the ratios of shorts/longs first, as well as the tick of the funding rate round.
1. Artificial Price Inflation: Manipulators may artificially inflate a coin's price to attract attention and lure in traders.
2. Shorts Trap: As the price rises suspiciously high, many traders are tempted to short, believing a correction is imminent.
3. Funding Fee Manipulation: With a high number of shorts, the funding fee for short positions becomes extremely high (like the 3% seen with $CKB ).
4. Sideways Movement: Instead of dropping as expected, the price may move sideways. This accomplishes several things:
a) It doesn't allow shorts to profit
b) It doesn't allow longs to profit significantly
c) It keeps new buyers from making quick gains
5. Fee Accumulation: As the price moves sideways, short positions accumulate huge funding fees, effectively transferring wealth from shorters to longs (and the exchange).
6. Delayed Gratification for Longs: Long positions don't see immediate profits from price increases, keeping them in the trade.
7. Liquidation Risk: Highly leveraged shorts may face liquidation if the price doesn't drop quickly enough to offset the high funding fees.
8. Market Makers Profit: Market makers and large players can profit from both the high funding fees and the eventual price movement.
9. Retail Trader Squeeze: Retail traders, both short and long, may be forced to close positions at a loss due to fee pressure or lack of anticipated movement.
10. Delayed Correction: The anticipated price correction may only come after many shorts have been squeezed out of their positions due to fees or liquidations.
11. Volume Illusion: High trading volume during this period may give the illusion of genuine interest, while in reality, it's largely driven by traders trying to escape unfavorable positions.
12. Psychological Warfare: This pattern creates confusion and fear, leading to irrational trading decisions and further profit opportunities for manipulators.
Understanding these dynamics is crucial before entering a trade, especially in situations where a coin's price action seems suspicious. Always check funding rates, open interest, and long/short ratios, and be wary of entering crowded trades, regardless of how obvious the setup may seem.

- A possible mitigation strategy is to avoid the fluctuations periods at any coin, especially alt coins, or just take your profits right away, open quick and small orders (short or long or spot) and once you have a chance just close it, a cent by cent makes a dollar my friends :)
Happy trading and remember this is not a financial advice, do your own research always.$CKB