Market Manipulation in Crypto Trading (Part 5)
In continuation of last post I would like to share how can you spot and avoid manipulation. I going to discuss five topics here.
Unusual Price Spikes
When a little-known crypto suddenly experiences a sharp price increase without credible news, this could signal market manipulation like a "pump-and-dump" scheme. In 2021, Squid Game Token skyrocketed in value before its developers vanished. This caused significant losses for the investors. So the investors should verify the reason for a spike before buying. This should be the key to avoid such a manipulation.
Checking of Trading Volume
Unusually high trading volumes in a coin with no real-world utility or active development may indicate wash trading. This is now a days very common way to manipulate the market. Bitconnect was infamous for its fraudulent activities. It often showed inconsistent volume trends. Avoid coins with no fundamental backing and dubious volume patterns.
Skeptical of Hype
Not all projects claiming to be "the next Bitcoin" are trustworthy. Scammers often exploit social media and influencers to generate FOMO (Fear of Missing Out).
Diversifying the Portfolio
In 2022, Terra (LUNA) crashed dramatically. This is a big loss for many heavily investors in it. Investors with diversified portfolios weathered the storm better.
Do Your Own Research (DYOR)
Investigating a project’s fundamentals can reveal potential red flags. Assess the team’s credibility, the project's whitepaper, and community engagement nicely so that investors can get out of risk of loss. The projects with vague goals and anonymous developers should be approached with caution. By staying informed and cautious, you can minimize the risks of falling victim to market manipulation.
~ Regards,
VEIGO (Community Mod)
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