Who and how to manipulate the crypto market?

Experienced cryptoinvestors constantly monitor news, traders’ chats, analyze the charts of upcoming events in order to understand the current investment climate and find opportunities for earnings.

But there is one important question. How much can you trust data from the network? After all, there were cases of using the information background in order to provoke the fall and growth of coins. Below in the article on examples it is possible to familiarize oneself with unobvious cryptographic manipulation strategies.

Method of manipulating cryptocurrency market

To bankrupt a bank during the Great Depression, it was enough to create a small queue and start a rumor about its potential bankruptcy. Due to the fact that investors were in a state of constant fear and instability, they tried to immediately take their money. In 1984, Robert Merton described this in an Antioch Review magazine in a “Self-Fulfilling Prophecy” article. An American sociologist has proven that a wrong definition of a situation can trigger a new type of behavior.

After 20 years, this experience was repeated by Lenora Jacobson and Robert Rosenthal in his experiment “Pygmalloon in the School Class”. The study was conducted in one of the primary schools in San Francisco. In each of the six parallels, they selected three teachers who agreed to act as subjects. The essence of the experiment was that at the beginning of the school year, they spread information to other teachers about supposedly especially gifted children in their classes, who in a year will show a chic result in an IQ test.

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At the end of the school year, teachers found that for these children, the IQ results were indeed significantly higher than their classmates. In this example, Jacobson and Rosenthal claimed that they were able to demonstrate how the expectations of the teachers affected the students’ cognitive process. In simple words: “prediction,” which was supposedly true, influenced teachers in such a way that their actions led to its implementation.

Panic and Fear of “Self-Fulfilling Prophecies”

Whole groups of traders use cryptocurrency quotes manipulation schemes on stock exchanges. For experienced market participants, these actions are known as Pump & Dump. Many young crypto traders become involved in stimulating or collapsing the market through the aforementioned method of self-fulfilling prophecy without even knowing it. In the largest community of Cryptocurrency, which is created on the Reddit social network, there are more than 375 thousand users! Even though most of these people are private investors, almost all of them influence the market under the influence of self-fulfilling prophecies.

FUD & FOMO

Every day dozens of coins show fantastic growth in price. Each month, a few coins hit the top 10 at Coinmarketcap , updating their “historical maximum.” In a matter of seconds, information about slumps or jumps scatters on Twitter, Reddit, Facebook, Telegram. Such actions directly affect the formation of the crowd from those who want to either quickly sell the coin for fear of being left with nothing (FUD – Fear Uncertainty, Doubt), or those who are in a hurry to purchase a coin driven by the lost profit syndrome (FOMO).

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All this is not the first year. Given that Reddit has strict rules that prohibit manipulation of a fraudulent nature and breed panic about an urgent purchase, or vice versa.

Philosopher Bobby Azaryan described in detail the theory of the FUD-FOMO cycle , which significantly affects the cryptocurrency market. As an example, there is a story when, in December 2017, three major information sources at once, Reuter, CNBC and Forbes, reported that Samsung, Microsoft, Bosch and Fujitsu would cooperate with the small IOTA project. Few knew about the project’s coin until this point. However, after a few hours, she was on line 4 in Coinmarketcap with a record price of $ 5.5. As soon as it turned out that we were talking about possible working relationships, and not signing contracts and merging, the price plummeted to $ 3 and remained in this position for a long time.

Investor and promoter

The voiced FUD-FOMO cycle does not always occur by chance. Often it is specifically provoke. A huge number of investors prefer one particular coin and begin to promote it in every way like Oriflame consultants. Such actions are built on the expectations that it will bring the fastest possible financial results.

Throughout the entire FUD-FOMO cycle, these “promoters” are waging informational and psychological warfare in order to gain the attention of a vulnerable investor. They find those who are constantly busy searching for other opinions that will help in making the most profitable decision on investing.

If this tactic were used by investors in the stock market, it would be quite possible to go to prison. Given that the cryptocurrency market has not yet been settled by law, ethical standards of this kind have not yet been defined for it.

That is why it should be remembered that at the moment any positive or negative feedback can be behind not just an individual, but a serious promotional campaign with a huge budget that lobbies exclusively its commercial interests. Unfortunately, there are still frequent cases on the crypto market where someone’s opinion can do much more harm than good.