Crypto market manipulation is defined as a deliberate attempt to influence the value of assets and disrupt a crypto market trend.
Bad actors create illusions to inflate or deflate market prices in order to profit. For example, they could disseminate false information, send out a series of pressuring tweets, generate bogus orders, issue false market signals, speak negatively about an asset to instill fear in traders, and so on. As a result, you must be able to recognize and counteract the manipulative tricks you will encounter as you progress.
Market manipulation has harmed both cryptocurrency investors and the cryptocurrency market as a whole. It makes the market unnecessarily volatile and dangerous for investors, a problem that has caused many traders and investors to abandon the market.
- 𝐑𝐞𝐬𝐞𝐚𝐫𝐜𝐡 𝐚𝐧𝐝 𝐌𝐮𝐥𝐭𝐢𝐩𝐥𝐞 𝐂𝐨𝐧𝐬𝐮𝐥𝐭𝐚𝐭𝐢𝐨𝐧𝐬
Before trading, conduct research by confirming prices from various reliable sources. You can compare asset prices and data for relative relatedness by using multiple crypto exchanges. Cross-checking a price on one exchange against another, for example, can reveal the true price and help you avoid a rug pull or pump and dump.
- 𝐒𝐭𝐮𝐝𝐲 𝐇𝐢𝐬𝐭𝐨𝐫𝐢𝐜𝐚𝐥 𝐓𝐫𝐞𝐧𝐝𝐬
They say that the trend is your friend. Historical trends provide trading precision because the data is consistent and reliable. Bad actors frequently prey on recent market trends but may struggle to distort historical trends. Trading on current trends may help reduce the rate at which market manipulation affects prices—manipulated trends do not last.
- 𝐀𝐥𝐰𝐚𝐲𝐬 𝐅𝐨𝐥𝐥𝐨𝐰 𝐘𝐨𝐮𝐫 𝐓𝐫𝐚𝐝𝐢𝐧𝐠 𝐏𝐥𝐚𝐧 𝐚𝐧𝐝 𝐑𝐢𝐬𝐤 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭 𝐏𝐫𝐚𝐜𝐭𝐢𝐜𝐞𝐬
Following a trading plan can keep you from trading on the spur of the moment or based on social media hype. Your trading plan should include trade execution guidelines as well as risk management strategies. You can trade based on a predetermined market condition with this in place. This is not to say that you will be completely immune to market manipulation. However, it will put you in a better position than someone trading on the spur of the moment.
- 𝐎𝐩𝐭 𝐟𝐨𝐫 𝐋𝐨𝐧𝐠-𝐓𝐞𝐫𝐦 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬
Most market hypes are fleeting, and those who HODL their crypto do not suffer the negative consequences that short-term traders do.
- 𝐔𝐬𝐞 𝐓𝐫𝐮𝐬𝐭𝐞𝐝 𝐄𝐱𝐜𝐡𝐚𝐧𝐠𝐞𝐬 𝐚𝐧𝐝 𝐂𝐨𝐢𝐧𝐬
Always trade on reputable exchanges. Market manipulation is common in new exchanges and coins with little trade activity. This is not to say that attackers cannot manipulate market prices on exchanges with high trade volumes; they simply have a smaller margin of error when compared to newer exchanges.
- 𝐃𝐢𝐯𝐞𝐫𝐬𝐢𝐟𝐲 𝐘𝐨𝐮𝐫 𝐏𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨
Given the possibility of market manipulation, putting all of your eggs in one basket may be a bad idea. It is a good idea to study different crypto asset prices to gain predictive patterns from how they behave in order to diversify your portfolio. This not only helps to reduce the impact of potential market manipulation, but it also helps to mitigate investment risks.