Let me tell you a manipulation theory of altcoin market makers - K-line chart manipulation and liquidity trap (contract mechanism loophole)
Explanation: The contract mechanism is just an order book matching mechanism, and pending orders will push up the mark price.
Market makers can create false liquidity by concentrating on high-frequency quotations and order withdrawals, and manipulate market prices in the short term! This is the famous supply manipulation!
Placing a large number of buy and sell orders to create a false supply and demand, and induce contract traders to follow suit!
Public opinion resonance: The news media first exposed it, and CZ responded around February 1 that he was optimistic about ETH's future, which made everyone think that ETH has a promising future! !
On February 1 and February 2, Ethereum had a wave of false rises!! (In fact, the data showed that market makers collectively quoted high prices, placed orders, and then quickly withdrew orders, so there was no large trading volume!!! You can see from the volume I recorded that the basic volume was still falling! The price did rise!) At this time, the price had already risen (lured more). Therefore, many people placed long contracts at the 3262 support level here! And once again, the price rose and there was a vacuum zone that broke through the downward trend line. The price rose until the price was above 3450, but the volume did not go up!!! All long position holders who participated in the altcoins believed that other altcoins would also rise!!!
This is the market manipulation theory! The long-order buying mechanism of the contract is a game of matching price and supply! The more people place long orders, the higher the price will be for market makers to match your long orders! Market makers will match your low-price orders with low supply and high-price orders with high supply. So at this time, you are stuck at the top of the mountain with high supply and high price, and the market price will appear to be a false increase in price!
Liquidity withdrawal: This is the theory of supply and demand matching! ! Traders quickly withdraw orders after placing orders, causing prices to rise and match at high levels! Followers rush in and quickly withdraw, and then market makers continue to sell at low prices and buy them themselves (left hand to right hand) to short the price! Bring the market crash! ! (The order book support is instantly weak!)
Reverse harvesting phase:
Through OTC, we can concentrate on the goods and establish short positions to sell! ! Short-term sniping! !
It can be seen that from the evening of February 2 to the morning of February 3, market makers began to sell below the price of Ethereum 3345!!! A large number of orders appeared and were executed!! It caused a concentrated plunge in an instant!! Pins!!! A large number of long orders were forced to close the waterfall effect! The transaction volume exploded, and my notebook recorded a maximum increase of 9 times!
Every time there is bad news (maybe it’s intentional)!! Market makers will follow the rhythm and harvest the contract leeks repeatedly!! So that they can pick up the corpses at a low price!!
I give the evidence for the argument (compared with large software API data):
Market makers have the phenomenon of influencing prices in the short term through order book management. Take the trend of ETH in early February 2024 as an example:
1. At the public opinion level, market sentiment is boosted by celebrity comments;
2. From a technical perspective, after the price broke through the key level of $3,262, the order book showed a sharp drop in the thickness of the upper sell orders (data source: CryptoQuant exchange flow indicator), but the on-chain whale addresses showed a net outflow during the same period;
3. When the price pushed up to $3,450, the perpetual contract funding rate reached a weekly peak of +0.12%, and a large number of retail long orders gathered in the $3,300-3,400 range (CoinGlass liquidation map shows that there is a $240 million long order liquidation threshold in this area);
4. During the crash on February 3, more than 150,000 ETH was transferred from the market maker tag address to the exchange (Nansen data), which was strongly correlated with the price falling below $3,300.
This phenomenon is consistent with - liquidity induced - long and short double kill
The above confirmed my prediction, and I avoided this round of multiple sniping attacks😎!!