Why do Bitcoin [ BTCUSD ] whales manipulate the market? The dark side of BTC exchanges

Exchanges and Bitcoin whales do not make a lot of money when BTCUSD moves sideways. The Bitcoin whales are notoriously manipulating the markets. The payoff for them is at least six times for a crash.

Bitcoin’s popularity increased manifold in the past couple of months. Retail investors were always attracted to BTC. The highlight has been the massive influx of institutioBTCnal investors. Investment banks such as JP Morgan and many others are taking an interest in Bitcoin.

The newer investors, especially the retail investors, would have heard about the market manipulation tactics a lot lately. Bitcoin’s abrupt jumps and uncontrolled declines might have done a lot of damage to the retail investors.


How do BTC whales engage in market manipulation

  1. It is a myth that Bitcoin whales are only responsible for the crashes. They move the markets with either Bear-trap or a Bull trap. If they cause a Bear-trap, they can get the people to sell early. If it is a Bull trap, people go on a buying frenzy. Thus, Bitcoin whales play with the trader’s psychology. The Fear of missing out or FOMO forces the trader to make a rash decision.
  2. The BTCUSD exchange itself can be the whale. They make a lot of money by getting any leveraged positions to margin call and causing people to get ‘rekt.’

Therefore, the unsuspecting retail day traders are at a substantial disadvantage. It is the reason why most people lose money in trading Bitcoin.


How much money does it take to cause a sudden move in BTCUSD markets?

Market manipulation might seem to be a big word. People feel that this can be done only with Billions of dollars and that too by big corporations. However, that is not true.

Source: TradingView.com

If we look at the fifteen-minute timeframe for BTCUSD and see the volume traded during the crash, it was only around 3.5k. The decline occurred in less than 5 minutes. 

3.5k BTC is equivalent to approximately $25 million. And the whales did not need to dump 3.5k Bitcoin. Even if the dumped 2k BTC, the rest would have been taken care of by the FOMO investors. 

Therefore, in under $15 million or less, the Bitcoin whales can cause a market crash. And it is a tiny amount compared to the transaction size taking place in the exchanges every day. The payoff for them could be at least $100 million!


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