Accurate Analysis of the Collapse of Cryptocurrency KOGE and ZKJ
Main Causes of Market Collapse
According to recent analyses, the main reason behind the sharp price drop of the cryptocurrencies KOGE before and after is ZKJ related to the use of smart contracts and short strategies on the exchanges. ZKJ may have opened a short position, leveraging futures contracts to manipulate prices.
Moreover, the liquidity factor plays a decisive role. ZKJ has greater liquidity than KOGE, which makes the 'offloading' in the market larger, consuming more capital. This liquidity shortfall is a likely cause of 'flash crashes' — sudden and rapid price drops that can easily lead to panic selling.
Role of Liquidity Providers (LP)
Liquidity providers (LPs) often set limits within a very narrow price range. When the number of exchanges is insufficient to recover large sell-off orders, prices can free-fall through this range, creating negative spirals. It can be seen that when prices drop, LPs panic and begin to withdraw quickly from the market, creating a domino effect leading to a complete price collapse.
Impact of Liquidity and Trading Volume
The continuous decline in trading volume of Alpha in recent days is a clear indicator. Large investors or huge LPs tend to exit the market quickly when they perceive the risk of a downturn. This has created a mass withdrawal effect, exacerbating the downward trend of cryptocurrencies in this phase.
Conclusion: Chain of Impact and Coping Strategies
The manipulation strategies of speculative organizations using futures contracts to lock in profits or reduce risks, especially during low liquidity periods. Investors need to be cautious, closely monitoring liquidity indicators, volume, and significant trading activities to clearly identify the potential for manipulation in the cryptocurrency market, especially for small tokens like KOGE and ZKJ.
Source: https://tintucbitcoin.com/koge-co-the-chiu-anh-huong-tu-hop-dong-zkj/
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