Hot search keywords

Hot search keywords

How Bitcoin Whales Manipulate the Crypto Market ?

In the cryptocurrency world, the ups and downs of token prices are manipulated by a horde of ‘big whales’ who form pump and dump crypto groups with the sore purpose of making a quick buck. 31°N,a China-based blockchain media, provides an inside look at the operation of such groups.


A Large ‘ Bitcoin Whales’ Group

Pump-and-dump schemes (P&Ds) are pervasive in the cryptocurrency space. A Chinese crypto enthusiast under his alias, Xiao Ye, recently has lurked in a private chat room operated by one of the largest “bitcoin whales” groups.

The well-organized group has more than 60 members, most of them from 4 countries and regions, including the United States, China, Russia and the Eurasian region. If anyone wants to join, they need to go through a rigorous KYC review process. Newcomers are also required to provide personable information, such as family address, bank deposits and information of family members, which will help group operators find them out in case they betray the organization.

“ The group was founded in 2013, and began to take shape two years later. 60% of its members come from traditional financial industry with Americans as the dominant player,” Xiao Ye said.

They usually rely on satellite phones to communicate with each year, and are able to cobble together billions of yuan every time they meet.


Three Tactics to Fleece Retail Investors

The group does not manipulate the price of altcoins although random pump schemes can easily drive up their prices by over 200%. This kind of groups tend to ladle out tens of millions of yuan in manipulating the price of mainstream cryptocurrencies like EOS,BTC and XRP. They will inject a ton of money into inflating a given mainstream crypto’s value as a way of attracting investors in a pump-and-dump scheme. In general they will adopt three tactics.

The first tactic: releasing bad news to ‘ buy low’

The pump-and-dump scheme sometimes starts with a string of negative news about a certain project released by these big whales, such as the project disappearing with money,or internal conflicts surrounding it. Schemers use these fake news to cause panic selling and buy cryptos at a lower price. They know clearly about the psychology of unwitting investors.

“ Those naive investors will never know the truth, and are easily influenced by false information or downright lies.” Xiao Ye said.

The second tactic: releasing good news to “sell high”

When the crypto market is starting to show signs of a turnaround,these whales will pour money in raising the price of a given asset . When it reaches a certain price target, they start to sell off their holdings to unsuspecting buyers who believe they are buying into a  “solid” asset.

Sometimes they will cooperate with the cryptocurrency project to release good news which has been prepared in advance during a certain period, which will intrigue a buying spree.

The third tactic these groups adopt is to evangelizing the given token on multiple channels, including social media to further boost its price. Then they reap more profits from  inexperienced traders.In the end, these retail investors are caught up within the hype cycle and fall prey to the pump scheme.

Besides, these “crypto whales” groups also help super-riches launder money using cryptocurrencies like Bitcoin, and they plan to launch a crypto exchange and a stable coin in the future.


How to Avoid Pump-and-Dump Schemes

  1. Do an in-depth research of any crypto that you want to invest in. Don’t believe any  influencers who self claim to be able to offer an accurate crypto price predictions.
  2. Reduce the transaction frequency in the bear market and focus more on the technical issues of cryptocurrency.
  3. As most altcoins will go to zero, put the money in the promising mainstream cryptos.


Please sign in first