Cryptocurrency Price Manipulation Methods
1. Pump and Dump:
A group of people or platforms raise the price of a particular cryptocurrency by buying large quantities.
After attracting individual investors and pushing them to buy at a higher price, large quantities are suddenly sold, causing the price to collapse.
2. Wash Trading:
Some platforms may create fake trades between their accounts to inflate the trading volume and make the currency appear more attractive.
3. Order Book Spoofing:
Large buy or sell orders are placed without the intention of executing them to give traders the illusion that there is selling or buying pressure.
These orders are canceled before execution when the market starts to move.
4. Exploiting Lack of Liquidity:
On small platforms or currencies with low liquidity, manipulation can be easier because large buys or sells can move the price significantly.
5. Manipulating the Spreads between Platforms:
Some parties may exploit the spreads between platforms to temporarily influence the price on a particular platform.
