A sudden spike and crash in the market often signals a classic whale trap, where major players (whales) manipulate prices to their advantage. This tactic, designed to lure in smaller traders, involves artificially inflating and then deflating a coinâs value to generate quick profits. Here's how it typically unfolds:
First, these whales make large-scale purchases of a cryptocurrency, driving up the price in a short period. This triggers fear of missing out (FOMO) among retail traders, who then rush to buy in, further pushing the price higher.
Once the price reaches a desired level, the whales swiftly unload their holdings at the elevated price. This sell-off leads to a steep decline in value, leaving the latecomers with losses. By preying on volatility and traders' emotions, whales take advantage of smaller players, reaping profits while others suffer.
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