The Manipulation of a Sea of Idiots in the Crypto Space
Shooting Fish in a Barrel
April 4, 2019
Earlier this week a "mysterious" buyer was identified as pushing the price of Bitcoin above $5,000 by purchasing 20,000 Bitcoin within an hour across several cryptocurrency exchanges, including Coinbase, Kraken, and Bitstamp. This massive and sudden buying of Bitcoin cost approximately $100 million to execute.
The simple question should be: why would anyone buy Bitcoin so stupidly and all at once rather than hiding this massive purchase with coordinated purchases over an extended period of time?
This sharp and sudden rally in Bitcoin earlier this week drove up the overall value of the cryptocurrency space by over $20 billion, causing many to rejoice, but many others to suffer devastating losses on their short positions on Bitcoin derivatives exchanges such as Bitmex that specialize in the trading of ridiculously leveraged, fake, counterfeit Bitcoin products such as puts, calls and cash-settled futures contracts.
This purchase of 20,000 Bitcoin within a span of an hour was an obvious and blatant attempt to fleece, yet again, individual investors of their money by destroying short positions (futures and puts) that were held by so many individual investors.
This "mysterious" buyer is obviously not a long-term investor of Bitcoin, for if he had been one, he would have taken the time to slowly accumulate Bitcoin over an extended period of time so that he could buy it at lower prices rather than buying everything that was on offer at some of the largest cryptocurrency exchanges all at once. This was a clear and obvious attempt to drive the price of Bitcoin up by an individual or organization that had an incentive to drive the price up quickly and suddenly.
The obvious culprit is an institution such as Bitmex or a very large client of theirs that had positions ready to take advantage of a sharp increase in the price of Bitcoin.
Those that sold put options prior to the sharp increase this week, such as Bitmex, and those that held futures contracts earlier this week made a killing as the price of Bitcoin shot up over $5,000.
Now that a swarm of uninformed and gullible individual investors have poured into the crypto space after this sharp increase in the price of Bitcoin due to the fear of missing out (FOMO), the price of Bitcoin should soon settle back down in due time.
People with $100 million are generally not stupid people. They usually don't go out and buy into a market and drive the price up so they have to invest at a higher and higher price - this is simply stupid. There was obviously an ulterior motive for this massive buying of Bitcoin within an hour to drive the price up by someone or some organization.
The primary manner in which to profit by driving the price up of an asset is through derivatives positions such as futures and options.
In the stock market and traditional commodities markets, this manipulation is highly illegal. In the crypto space, however, this type of manipulation is all okay as countries around the world have yet to implement a full body of legislation regulating cryptocurrencies.
The next time you see the price of Bitcoin rise sharply due to some "mysterious" buyer driving the markets up willy-nilly (supposedly), sit back, don't be an idiot, enjoy the show and know there are a lot of bad actors in the cryptocurrency space such as the U.S. government and all of its agencies, counterfeit Bitcoin exchanges such as Bitmex and the CME, and other scammers (such as ripple) at every corner wishing to separate you from your hard-earned money and hoping Bitcoin and all of its upgraded brethren such as Cardano, EOS and Zcash just die and disappear into dust.
Nah, these massive surges often offer a very obvious trading opportunity. You can almost always sell intelligently and buy lower, increasing your volume.
Traders see the massive movers in the crypto space all the time. I often wonder who they are. There are people with insane amounts in the crypto space, trading all the time. When they turn off their bots, it's obvious. When they turn them on though...sometimes it can be a very frustrating day until you can learn to deal with however their insane bots run. These people with massive amounts in the market have tools to make purchases across the markets and do all sorts of crazy things. I seriously doubt it's any individual user...because you are talking about actions undertaken using hundreds of thousands of dollars at least, and often hundred of millions of dollars, or even billions. I don't know about this particular action...but with other things that I've watched happen live...I've had the tendency to think there are things like hedge funds trading billions in crypto. Perhaps it's banks. I dunno. Whoever it is, they play with money that can make or break large corporations like it's pocket change.
My guess is, it's Bitmex or somebody aligned with them. Anyway, trying to chase what they're doing is wasting time and money. Getting tired of watching these guys just play with this market when there's obviously such promising times ahead.
Well, as crypto grows, it will be harder for them to manipulate. Considering how well known crypto is, and all the hype around it, it's massively undervalued. Hell...the market cap even when it was at it's peak was probably low, just the majority of it was in Bitcoin. As more people get more familiar with it and figure out how to buy it and feel safer doing so, the number holding it will expand greatly. Then they'll need a lot more capital to manipulate it...and there will be more eyes watching.
There are a lot of variables at play here. Someone who makes a move like that can probably also create enough fomo to sell a little bit back at the peak to reclaim those losses.
In the grand scheme of things I'm not too worried about these manipulations. Crypto will continue to break barriers and evolve itself no matter how choppy the water gets.
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