Bitcoin whales, who are the main price manipulators, are closely watching Bitcoin, losing the bullish momentum close to the resistance level.
On August 2nd, the Bitcoin price dropped by 12%, while Ether dropped by 21% in 5 minutes. That led to a drop in the value of other altcoins as well. It is still not clear on the exact cause of the fall. It would not make sense for the selling volumes to be high as the market was illiquid.
Do investors manipulate the price?
Analysts believe that the price crash was intentional as buyers are aware of their buying decisions, and chances are high, they bought many coins in a spot market when the price was heading to the main technical resistance level.
An investor can manipulate the price by a massive buy to build a strong position then make a market order to remove al offers from the order book and push the price below a specified resistance level.
This move made investors who had made orders above that resistance level to make buy orders. Due to that, the investor who made the market order enjoys the profits of the coins he had initially bought.
The trader will then move to build a short futures position in different exchanges using different accounts to seal his identity. When you use a 30x to 50x leverage, an investor can maintain the position even when the price appreciation increases by 2% or 3%. When he achieves a significant future position, he can sell the BTC he had purchased at market rate when the market liquidity is low. This will make the bids in the order book to be removed, which will lead to a price crash. That gives him high profits in a short position.
Massive returns for the big players
Many big players like to take advantage of weekends as the liquidity, and trading volumes are lower comparatively.
A significant advantage is the high upfront capital and seamless trading infrastructure that ensures all is executed well.
When we compare crypto markets to traditional markets, the liquidity and volumes of crypto have higher returns in a short time frame as there are no regulators in the picture.
Futures can be used to take an initial long position for more leverage. It is an effective method that requires certain market conditions and a manipulate instrument. This is illegal in the traditional markets, which gives a crypto market advantage.
There are chances that price manipulation will fade out as crypto markets become more mature.