A comprehensive understanding of how the dealer manipulates the market and harvests inexperienced investors throughout the process.
Analysis → Position building → Testing → Consolidation → Initial rise → Cleaning → Price rise → Unloading → Rebound → Dumping → Cyclic repetition...
Complete analysis of the dealer's market manipulation process:
1. Preparation phase
Before the dealer begins to intervene in a specific currency, they will comprehensively gather various aspects of project information, including total chip amount, unlocking situation for precise statistics, cost for investors at different levels, chip dispersion, and community enthusiasm evaluation, etc. After collecting the information, they will set the price rise target based on the scale of funds they can mobilize.
2. Position building phase
Before building positions, the dealer will conduct various investigations covering market sentiment, BTC market trends, macroeconomic conditions, policy risks, etc.
Usually, the dealer chooses to enter the market when the general sentiment is pessimistic, market emotions are low, inexperienced investors are discouraged, and hold a negative attitude towards the currency's prospects. As the saying goes, when retail investors are fearful, the dealer is greedy.
Depending on the dealer's strength, their holding ratio may vary. Short-term dealers can operate with 10% - 30% of the chip quantity, while long-term dealers often need to control over 40% of the chips, although this also depends on the dealer's strength. Generally, dealers do not build positions at high prices.
The dealer's position building methods mainly include the following:
Negative news accumulation: By leveraging negative news in the cryptocurrency space, such as technical failures of projects or rumors of stricter regulations, they suppress the price, triggering panic selling and absorbing chips at low prices.
Trap for short sellers: By creating the illusion of a downward price movement through technical means, they induce retail investors to sell, while the dealer absorbs at low levels, completing the position building.
Large-scale buying: Concentrating funds to buy a target currency in a short period, pushing up trading volume, attracting following trades, and secretly collecting chips.
Accumulating during rebounds: In the rebound phase after a price drop, they gradually buy, using the psychology of some investors to relieve losses or take profits to expand their holdings.
3. New project ambush: When projects associated with the target currency have major technical upgrades, new application scenarios, or strategic cooperation expectations, they layout positions in advance.
Testing phase
During this phase, the dealer slightly raises or suppresses the price to observe market buying and selling behaviors, transaction volumes, order placements, and emotional fluctuations, understanding key information such as the degree of chip locking, strength of following trades, resistance, and support levels, providing a basis for later fine-tuning the trading strategy.
However, testing is not a mandatory option; some dealers may directly start rising or take other actions based on their sharp market intuition and rich experience, and the timing of testing can be flexible, carried out at appropriate times throughout the market manipulation.
4. Consolidation phase
Consolidation aims to optimize the chip structure and accumulate upward momentum. Depending on the price position, it can be subdivided into low, medium, and high-level consolidation. Price movements are often alternating between rising, falling, and consolidating, with consolidation occupying a large amount of time. During this phase, price fluctuations are mild and direction is unclear, testing the patience of investors. The dealer uses this time to solidify their cost basis, clear out floating chips, and wait for an opportunity to rise. This phase often tests the patience of inexperienced investors the most, as the movements can be quite frustrating.
Tips: It may seem like a cryptocurrency market, but the fundamental principles remain unchanged.
5. Initial rise phase: After completing the initial groundwork, the dealer starts the initial rising trend, moderately raising the price to attract market attention, stimulate enthusiasm for investment, and reduce subsequent rising resistance. However, to avoid exposing intentions too early and attracting following trades and regulatory attention, the initial rise is limited, followed by a slight price drop to clear out profit-taking and unstable chips, laying a solid foundation for subsequent stable rises. During the cleaning phase.
6. The rogue dealer, after accumulating a certain amount of chips, will adopt a strategy of suppressing the price to drive away following trades and force early holders to sell. This can both absorb more chips at low levels, reduce the cost of holding, and eliminate weak-willed retail investors, reducing subsequent selling pressure for the high-price unloading.
7. The price rising phase follows a series of operations including initial capital accumulation, testing, and cleaning. This leads to a high degree of unity between the bulls and bears to a certain extent. Once the dealer controls a large amount of chips and stabilizes the market, the rise in price becomes a natural result. During the price rising phase, the price rises rapidly, as the dealer cleverly uses factors such as market enthusiasm, technical indicators, and positive news to attract more investors to follow suit, pushing the price to new highs and achieving substantial profits.
8. Unloading phase: As the saying goes, 'buying is for apprentices, selling is for masters.' Unloading is the key goal of the dealer's market manipulation. Successfully distributing chips is the only way to turn book profits into actual gains. Distribution is the most critical phase in the market manipulation process because only when a dealer successfully distributes chips can they convert book profits into actual gains. To this end, the dealer will use all means available, such as creating an illusion of market prosperity, guiding emotions through media influence, and using related accounts for fake transactions to create an active atmosphere, inducing unsuspecting investors to take over the chips, ensuring a smooth unloading.
9. After the price of the currency drops, a brief rebound often occurs, known as the rebound phase. When the price falls near the profit line due to the dealer's selling, some inexperienced investors, driven by the psychology of 'buying the dip' and their own need to unload remaining chips, will slightly raise the price, creating a rebound market. However, this is mostly short-lived; after the rebound ends, the price is likely to continue to drop, possibly reaching new lows. If investors recklessly 'buy the dip', they are easily trapped in a loss. The rebound phase, in the process of market manipulation, is a secondary phase, and some targets may not even have a rebound process.
10. Dumping phase: Passive selling: When sudden negative news occurs, such as significant technical vulnerabilities, disputes with project parties, or sudden changes in regulatory policies, it triggers a panic selling wave in the market, and the dealer may be forced to dump to reduce losses. This action may lead the dealer to abandon their position or, after dumping, seek to absorb chips at low levels again to regain control. High-level dumping after successful selling: After successfully unloading at high levels and locking in profits, the remaining small amount of chips is no longer significant. At this point, dumping can suppress the price and allow for low-level absorption for future positioning, without considering market image and cost.
