Divided into three types of people
1. Extractors
2. Smart traders
2. Rule breakers
Extractors, as the name suggests, are those who do not participate in the betting but act as intermediaries to extract fees:
- Those who earn commission from exchanges. Don’t look down on them; for big YouTubers and Weibo influencers, it’s normal to earn millions of RMB in commissions every month. Top YouTubers like MoonCarl can earn tens of millions of USD in commissions per year. Moreover, computer knowledge is very useful in this field, with some professional SEO teams focusing on the keywords in this area. Sometimes, when you search for an exchange's name on a search engine, the first result you click on is actually their referral link. These top SEO teams can earn hundreds of thousands to tens of millions in a bull market per month.
- Running paid communities and acting as information intermediaries. Some influencers start paid communities after accumulating a certain number of followers; a slightly larger paid community can earn millions of RMB in annual fees. Additionally, these group leaders have extra gains; for example, if they discover some activity at exchange XXX, they can post it in the group, and many people register through their link, earning them referral fees. Suppose I post something like 'US stock account opening tutorial' on my Zhihu account; I estimate at least 200 people will open accounts through my link. Each referral can earn $100-$1000 commission, so you can calculate how much I could potentially earn if I had lower moral standards.
Smart traders, most of whom are individuals or teams with unique skills.
- Computer faction. Many traders who make a lot of money in this market are programmers with a computer background or institutions with many programmers. There are many types of factions evolved from computer technology, but they are generally divided into on-chain and CEX factions.
On-chain grabbers: Some people develop programs to batch grab airdrops, events, fair launches, and whitelists. They will grab anything that ensures someone else will take the risk to make them money. Many of the big players in the domestic crypto scene started using Fiddler tools to grab profits as far back as 2016-2017.
On-chain MEV: They profit from the slippage that retail traders pay. You can say this is very competitive, but you cannot say it’s unprofitable. The largest MEV bots generally earn over a million dollars a month.
On-chain - CEX arbitrage: Many times, speculators and market makers like to ignite the market on CEX, pushing the price up several points with a large order. When there is a significant price difference, arbitrageurs see their opportunity. They can buy chips on-chain and then hedge on the CEX contracts, patiently waiting for the price to revert before slowly selling off, completing a risk-free arbitrage.
Statistical arbitrageurs: Many coins in this market have correlations. The underlying principle is that market participants think, 'AAA has risen/dropped, while the similarly conceptual BBB has not, so I will buy BBB.' Statistical arbitrageurs write sophisticated programs to calculate the historical correlations between different coins, and when the deviation reaches a certain level, they will take action to arbitrage.
Market makers: Market makers often wear multiple hats. On one hand, they provide liquidity for buyers and sellers in the market; on the other hand, they also engage in statistical arbitrage, delay arbitrage, and even VC. Theoretically, market makers earn from the spread, but they also take on many other private jobs to improve their investment returns.
News trading, which is my area of expertise. The profits come from retail traders’ delayed information and the market makers' insufficiently fast information channels to cancel orders. Retail traders often rely on a few slow news outlets or word-of-mouth in communities, taking several minutes to react to a piece of news. Therefore, as long as you buy faster than retail traders, there is profit to be made.
It's too varied, I don't want to continue writing.
- Comprehensive data faction. Data factions often look at market IO position data, large order transaction data, and monitor large holders’ address movements. They have an all-seeing eye in the market, grasping the flow of money faster than ordinary people, essentially making money from information lag.
Rule breakers
- Market manipulators, who are the market makers in the secondary market. They will accumulate a large amount of low market cap altcoin spot chips in advance, then ignite the market to push it up by more than ten times. When retail investors fomo in, they will slowly offload using TWAP. Retail investors see, 'Wow, this coin has dropped by 50%, I want to buy the dip,' but in reality, even with a 50% drop, the market manipulators are still in profit.
- Token issuance MCN, first-tier market market makers. When a hot topic suddenly appears in the world, like Musk tweeting, 'My AI is named GROK,' token issuers will start to act. They have an automated deployment system that can issue tokens, add liquidity, and distribute to their internal addresses with one click. They will create false trading prosperity using dozens to thousands of addresses while collaborating with many KOLs to promote the token. After attracting enough retail investors, some will slowly offload, while others will rug pull with a large red candle.
Why can market manipulators act unscrupulously? Because many non-Western countries treat cryptocurrencies as commodities, and there is no concept of 'market manipulation' in the legislation regarding this category in many countries. Just like if you hoard and inflate the price of Rolex watches or sneakers in China, no one will care; similarly, inflating coin prices and cashing out goes unchecked.
Continued attention$BTC $ETH $XRP
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