In-depth Analysis of How Large BTC Manipulators Control Prices and Obtain Liquidation Liquidity: An Insight into the Underlying Logic

In the cryptocurrency market, especially for assets with significant volatility like Bitcoin, well-funded large manipulators have the ability to strategically manipulate market prices and trigger large liquidations to obtain liquidity and profits. Although this trading method is complex, the core logic and operational steps behind it have a clear structure. This article will delve into how large manipulators precisely manipulate market prices and gain liquidity from short liquidations.

1. How large manipulators use the liquidation mechanism to control prices

The BTC market heavily relies on leveraged trading, and traders generally use high leverage, placing many long and short positions in a state of potential liquidation at any time. Some large manipulators (large investors or institutions) push market prices to key levels through wash trading or large-scale buying and selling, triggering large liquidations. Large manipulators manipulate the market through the following steps:

1. Acquiring market data and position distribution:

• Large manipulators first analyze the contract holdings in the market, paying particular attention to liquidation data. Platforms like Coinglass provide liquidation maps that show the intensity of liquidations within different price ranges, allowing large manipulators to accurately assess the concentration of liquidation positions in various price areas.

• Through data analysis, manipulators can identify the liquidation positions of most shorts and longs, as well as potential liquidity gathering points in the market.

2. Wash trading and price manipulation:

• Large manipulators often use 'wash trading,' which involves buying and selling among multiple accounts to create the illusion of strong market buying pressure, gradually raising prices. This operation is very effective in high-leverage markets, as price increases force some shorts to close their positions at high levels, creating automatic buying demand.

• Manipulators intentionally trade at key price levels using their BTC and fiat, gradually pushing prices up until large short liquidations are triggered.

3. Creating a 'short squeeze' effect:

• When prices reach the liquidation line for shorts, these positions are forced to close at market prices, further pushing prices up. This process triggers a 'cascade effect,' causing more shorts to be liquidated due to forced closures, resulting in a brief surge in the market.

• As short liquidations increase, market liquidity also rises, allowing large manipulators to choose to sell BTC at high prices, realizing part of their profits while utilizing market buying demand to smoothly offload their BTC.

4. Utilizing market sentiment for secondary manipulation:

• After liquidating short positions, market sentiment often shifts, and ordinary investors, seeing rising prices, may experience FOMO (fear of missing out) and rush to buy. At this point, manipulators may increase their buying intensity, further pushing prices up and creating an illusion of price strength.

• When market sentiment is high, manipulators quietly offload their holdings to realize profits. This operation ensures they can sell their BTC at high prices without causing significant market volatility.

2. Profit analysis: How to maximize profits through liquidation liquidity

Large manipulators do not rely solely on pushing prices up or down to gain profit from price differences; rather, they guide market direction to obtain liquidity from liquidations and profit from it.

1. The natural buying and selling brought by liquidations:

• During the liquidation process, a large number of shorts are forced to close their positions, generating a significant amount of automatic buy orders. These buy orders push up prices, creating a buying surface for manipulators to offload their BTC smoothly.

• Similarly, when manipulators want to push prices down, they can trigger long liquidations by wash trading and concentrated selling, creating a large number of sell orders. These forced sell orders increase market selling pressure in a short time, further pushing prices down.

2. High-frequency wash trading transaction fees:

• Manipulators usually choose to operate on exchanges with lower trading fees, and may even trade on platforms offering certain discounts to reduce transaction costs.

• By frequently engaging in wash trading, they create market volatility and trading volume, attracting a large number of speculators to participate in a short time, and use their leveraged positions to trigger liquidations for profit.

3. Using leverage in the futures market to amplify returns:

• The high leverage in the BTC futures market means that small price fluctuations can trigger large-scale liquidations. In the futures market, manipulators can use contract leverage to multiply their principal, maximizing returns.

3. Risks and challenges: The difficulties of manipulation

Although large manipulators have the ability to control the market, these operations are not without risks, primarily including the following points:

1. Market regulatory risk:

• Wash trading and market price manipulation are considered illegal activities, and some exchanges monitor abnormal trading. Once manipulators are detected, they may face penalties such as account bans.

2. Market depth and liquidity constraints:

• In markets with high liquidity, the amount of capital required for large-scale wash trading or price increases will significantly increase. Higher capital input may lead to increased costs and compressed profit margins.

3. Risk of manipulation going out of control:

• When manipulators raise or suppress prices, if market sentiment becomes uncontrollable, it may lead to prices exceeding expected ranges. For example, after a price increase, irrational surges may occur, leading more retail investors to flock in, increasing market uncertainty.

4. Conclusion: The underlying logic of BTC price manipulation

The high leverage, high volatility, and lack of strict regulation in the BTC market give manipulators significant control over the market. Through wash trading and liquidation, manipulators can convert their capital advantage into market dominance, driving prices up or down to trigger large-scale liquidations, creating a 'cascade effect' and guiding market sentiment.

The underlying logic of price manipulation:

• Utilizing liquidation liquidity: The automatic buying or selling of liquidated positions creates additional liquidity in the market direction, facilitating manipulators to quickly realize profits.

• Manipulating market sentiment: Large manipulators influence market sentiment through wash trading and price control, guiding retail investors to follow their trades, creating a market synergy that further amplifies profits.

• The risks and opportunities of high leverage: Through high-leverage operations, large returns can be obtained while triggering liquidations, but precise control over price fluctuations is needed to avoid losses from adverse movements.

The operating model of manipulators in the BTC market directly targets the core mechanisms of the market—liquidation and sentiment control. This manipulation technique not only requires a high level of capital and market analysis but also demands precise timing to prevent market fluctuations from exceeding expectations, affecting profits or even leading to counter losses. While this operation may yield considerable profits in the short term, the long-term sustainability of market manipulation remains questionable, and it carries certain legal risks.