Whales in the cryptocurrency market are large investors who own huge amounts of cryptocurrencies such as Bitcoin or Ethereum, and are able to influence the market thanks to their large buying or selling power. Here are the most prominent ways whales manipulate the crypto market:
1. Massive Trades
Whales make huge buys or sells, which moves the market significantly:
Big buy: causes prices to suddenly rise, attracting more buyers.
Big sell: Causes prices to fall, causing panic among small investors.
2. Pump and Dump
Whales pump up the price of a coin by buying large amounts and creating hype around it.
After the price rises, they dump to make profits, causing the price to collapse and small investors to lose.
3. Order Book Manipulation
Placing huge, fake buy/sell orders to give the market the illusion that there is buying or selling pressure.
Once the market moves based on these orders, they cancel them and make a profit from the spread.
4. FUD
Whales spread negative rumors (Fear, Uncertainty, Doubt) about a particular coin, which prompts small investors to sell at a low price.
Then, they buy these coins at low prices.
5. Liquidity control
In currencies with low liquidity, whales can easily control the price because the number of daily trades is small, making the market prone to volatility.
6. Coordination between whales
Sometimes, whales team up to manipulate the price of a particular currency, either by raising or lowering it, to make mutual profits.
How do you protect yourself as a small investor?
Avoid panic: Don't make decisions based on unjustified moves or rumors.
Research and Analysis: Study the project and the currencies you are investing in well.
Trade with caution: Use strategies such as Stop Loss to protect your investments.
Portfolio diversification: Don't put all your money in one currency.
Avoid currencies with low liquidity: they are more susceptible to manipulation.
A deep understanding of market movements helps you reduce the negative impact of manipulation.
