In the cryptocurrency investment market, sharks play an extremely important role and greatly influence or manipulate the price of a certain cryptocurrency. Therefore, virtual currency investors need to know how to analyze behavioral psychology as well as quickly find information about crypto sharks to take advantage of opportunities or avoid being trapped.
Who are the sharks in the crypto market?
Who are crypto sharks?
Crypto whale is a term used to refer to individuals or organizations that hold a coin or many coins in large quantities. From there, they can influence the market in the direction they want to profit from other unwary investors.
Characteristics of crypto sharks
Sharks are the "masters" of hunting in the vast ocean. This characteristic alone helps us understand the power of this creature. In the virtual currency market, individuals or organizations are called crypto sharks because they have the following basic characteristics:
Holding a large amount of BTC, about 500 BTC or more. In the market, investors who are able to hold such amount of Bitcoin are not many, accounting for a very small percentage but causing a big impact on the market. These whales may have participated in the market very early. They owned Bitcoin from the very beginning (2009). However, their identities are still a mystery.
They are able to predict market trends. And know how to influence the market to make a profit. They can do that thanks to their knowledge, experience and financial potential.
Always act with a specific strategy that is well prepared for every possible situation.
Those are the basic characteristics of crypto whales. So what do whales usually do to influence the market? Let's analyze the psychology of whale behavior in crypto investment to better understand how they operate.
Shark Behavior Psychology in Cryptocurrency Investment
To influence the market, crypto whales must implement a strategy of psychological manipulation of retail investors. However, before doing that, the whales must carry out their pumping process.
Shark Inflating Process
According to the analysis of experts in the industry, the problem that sharks care about is not the price of cryptocurrency but the liquidity of the market. The reason is that cryptocurrency sharks are all people with great financial potential. So they do not need to buy low and sell high, but can completely buy high and sell at an even higher price. In order to affect the liquidity of the market, sharks must pump and inflate. Why can sharks do that?
Firstly, because the size of the virtual currency investment market is still small and most countries do not have a specific legal framework, sharks can take advantage of legal loopholes to make a profit.
Second, take advantage of the fear of missing out, the "peak-buying" mentality and greed of small investors to lure them into buying coins and making a profit.
Here is the typical crypto shark pump and dump process:
Gom coin:
Recognizing the shark's steps to collect goods will help you quickly detect and avoid falling into the "trap":
Usually collect low priced coins to save investment capital.
Buy in small batches to avoid detection and keep prices from rising too quickly.
Create fake sell orders to further lower coin prices to continue collecting more.
Pump coin (What is Pump?):
Pump coin is a form of pumping up the price of coins by sharks before officially dumping coins. Therefore, investors need to be aware of this behavior so as not to participate. Before officially dumping, crypto sharks will test pumping in the following ways to see the market's reaction:
Create events, listings, hardforks,...
Create rumors.
Create technical analysis with predictions.
Activate small coin pump groups.
In fact, the above steps are performed by sharks very sophisticatedly. So new and inexperienced traders can hardly recognize them.
Coin Discharge:
After creating corridors such as rumors, events, etc. in the above step, the sharks will wait for an opportunity to dump coins. The dump process usually takes one to two days. At this time, traders see that the market has a coin that is going up and will focus on buying. And this helps the sharks make a profit. However, there are also cases where groups of virtual currency sharks dump coins massively in a few minutes and dump in many batches. After each dump, the sharks make huge profits.
The question now is why crypto sharks can do this. The answer is that they know how to manipulate the psychology of small, inexperienced investors.
Manipulating investor psychology
Taking advantage of investors' greed Sharks understand the psychology of cryptocurrency investors. Because we all participate in this market for the purpose of making quick and big profits. Meanwhile, we cannot deny that any coin that continuously hits new peaks is valuable and brings huge profits to investors. Therefore, when seeing a coin with good signals, digital currency investors will be afraid of missing out (FOMO) and frantically search for information about it to buy. Because they know how to take advantage of the fear of missing out and greed of small investors, sharks make a profit.
Taking advantage of the "peak chasing" mentality: After the pumping process, the sharks will help a coin reach a peak and then dump their stocks. At this time, investors will compete to buy in the hope that the coin will continue to reach a peak. This is called the "peak chasing" mentality. Small investors often buy when the price is high and sell when the price drops because they look at the "peaks" and "bottoms". But the sharks do not do that. The sharks sell when the price goes down and they buy at a certain price and then pump the price up.
The positive and negative roles of sharks in cryptocurrency investment
Sharks can bring a coin to the top, but they can also bring it back to its original position or lower. Therefore, investors need to understand the pumping and dumping cycles of sharks to avoid or "swim" with them. Those are the major impacts that sharks can cause to the cryptocurrency market. However, besides the negative impacts, sharks can also bring many positive aspects.
Besides manipulation, crypto sharks also contribute to making the virtual currency market more vibrant.
✨Positive: Through the process of pumping up the price of coins, crypto sharks help the cryptocurrency trading market become more vibrant and attract investors to participate. Not all small investors suffer losses when sharks create waves. A group of good and experienced investors will know how to take advantage of this opportunity to "swim" with sharks. Helping the market to flourish. In addition, in some exceptional cases, sharks also tend to buy goods when the price of coins drops and hold them for a long time. This should help the market to reduce serious declines.
Negative: Sharks create "storms" that cause many small investors to suffer heavy losses and be terrified.
The question now is how can small investors spot the sharks and avoid them or find a way to “swim” with them? We will explore this issue in the section below.
How to Quickly Find Information About Crypto Market Sharks
Searching for the number of pending sell orders or buy orders on the order books of platforms and exchanges is the simplest way to find and detect crypto sharks. Then, if you discover a large volume of orders waiting to buy or sell a certain coin on the order book. It is very likely that the shark is about to appear because this is just one of the ways the shark pumps to attract other investors. Then, the shark sees the opportunity and suddenly cancels the pending buy or sell order and suddenly buys or sells to make huge profits.
Follow on Whale Alert
The cryptocurrency market operates on blockchain technology, so it is very transparent. Therefore, when executing a large volume of coin buy or sell orders on the exchange, the Whale Alert system will post information on Twitter so that all investors can grasp the information of the transactions that have occurred. This is when we can detect sharks. Therefore, please take the time to update and grasp the information from Whale Alert to avoid falling into the shark's trap.
Conclude
Thus, with their economic potential, crypto sharks manipulate the cryptocurrency market in a sophisticated way. They can cause small investors to suffer heavy losses if they do not know how to detect them. And they are psychologically afraid of missing out or "chasing the top". Therefore, to avoid "tsunami" waves, investors need to always be vigilant against sudden price increases of any coin.
If you are a new and inexperienced investor, improve your knowledge. Currently, at the Remitano forum, there is always a team of good financial experts providing useful articles for investors to refer to anytime, anywhere. In addition, if you are interested in investing in cryptocurrencies, do not worry and open an account at Remitano. We will help you get the best profitable investment!
Disclaimer: The above article is for informational and educational purposes only. The advice in the article is subjective and the author is not responsible for any investment decisions of the reader.