Introduction: Trading is not a monster; it is not just a game of chance. Trading is, in fact, a game between retail investors and market makers! If you always observe prices with a retail mindset, you will eventually become the fertilizer of liquidity in the market!
In this article, I will analyze how the market makers of GAS violently pushed prices up to harvest retail investors and how to identify potential similar trading opportunities. The content is quite sensitive and may be subject to censorship at any time, so feel free to copy, save, and study repeatedly. GAS began to exhibit unusual surges on April 9 and directly climbed into the top three positions on the gainers' list. After discovering this anomaly, I immediately notified my community members:
Many who do not understand trading may instinctively short here because the overall market environment on April 9 was negatively impacted by a unilateral 50% tariff increase from the U.S. Additionally, we faced a high probability of a strong counterattack from the U.S., leading to a very pessimistic global market outlook. Bitcoin even dropped to $75,000, and various so-called influencers were bearish. Most people would find this explosive surge unsustainable and choose to short at high levels. If you are one of those retail investors who incur losses most of the time, you would likely be tempted to short during such violent increases in a bear market. Even if you don’t short, you wouldn’t dare to chase the long! However, I clearly told my members in the group to chase the long!
Next, I will get straight to the point:
First, we must understand that as retail investors, the chips in our hands, whether buying or selling, are mostly orders from market makers, accounting for 99% of retail turnover. Price fluctuations are not decided by retail investors but by market makers. The bulk of market makers' profits actually comes from manipulating market prices and then selling cheap chips to retail investors. In the face of violent price surges during bear markets, shorting is often not the first choice. The optimal choice is to observe market data and assess whether the current price still has upward potential. Shorting halfway up will only become fuel for the subsequent surge! The violent price surge of GAS on April 9 saw a 30% increase in just one hour, and while it topped the gainers' list, data analysis easily shows that this surge is not over. Market makers are inducing short positions by creating a significant premium difference between the spot price and the contract market. This way, they turn naive shorts into high-quality fuel for future liquidations. First, let’s look at the changes in contract market positions:
Starting from 10 AM on April 9, the number of GAS positions on Binance surged nearly threefold in a short period. This abnormal data indicates that market makers have embedded a large number of long positions at this point. Second, let’s examine the premium difference and funding rates between spot prices and contract prices:
The higher price in the chart is the spot price, while the lower price is the contract price, showing a difference of more than 5%. Moreover, by observing the order book for the spot market, we can see that the buy orders far exceed the sell orders. This clearly indicates that market makers are manipulating the price, preventing the spot price from dropping. Let's look at the second chart, which contains two important pieces of data: the funding rate and the contract order book price. The funding rate of -2% has reached its extreme, meaning that every four hours, shorts pay 2% of their position size to longs. In other words, even if the price remains unchanged, shorts will lose 2% of their position size every four hours, while longs will gain 2%. If you are using 10x leverage, you would lose 20% of your margin every four hours, and after 20 hours, your account would be liquidated, further pushing prices higher. The reason the contract price is lower than the spot price indicates that there are many shorts engaging in reckless shorting, which is exactly what market makers want to see. There is no need to invest capital to push prices up; just maintaining the price will cause shorts to doubt their life choices. When short enthusiasm diminishes, they can push prices higher again, causing more shorts to enter at high levels, repeating the cycle until all bullets of the shorts are exhausted. Finally, market makers will quickly sell the chips they accumulated at the bottom to retail investors who are buoyed by the rising sentiment, completing the final harvest.
In my opinion, trading is not based on hearsay or guesswork. Since I started dealing with Bitcoin in 2017, I have experienced trading based on indicators and naked K chart trading. Now, I rely more on utilizing market data for trading. When all order directions are hidden in the data, what tests you is your reading ability. This market has never lacked gamblers, while rational players have become rare and precious! The content of this review applies to any future price manipulation behaviors similar to gas. I hope everyone can learn from it and become winners in price games!
