An article to understand encrypted market makers: how to "manipulate" the encrypted market?
Compilation of the original text: Deep Tide TechFlow
Compilation of the original text: Deep Tide TechFlow
Have you ever wondered how market makers manipulate the cryptocurrency market? Why are they behind the sharp rise and fall? Crypto analyst Rekt Fencer tells you all about cryptocurrency market makers in this article.
Market makers facilitate market transactions by buying and selling assets, earning money from the bid-ask spread. There are now two types of market makers:
1. Traditional market makers;
2. Market makers who provide project consultation;
Traditional market makers focus on projects with huge market capitalization. The main goal is to maintain the established price, maintain the liquidity of the market, and establish trading strategies for Token unlocking.
The market makers who provide project consultation are mainly:
help with fundraising for projects;
Provide DEX liquidity;
Formulate the Token price strategy on TGE;
Help the team cash out;
Therefore, these market makers fulfill all the necessary conditions of the project at an early stage.
Cashing out is basically selling the team's Token on TGE. Reasons for this include:
raise funds for project development;
Raise funds to repurchase Token from seed round or private placement;
Purchase "Lambos, Houses and Yachts" for the project team;
The strategy of a market maker depends on the stage of the cryptocurrency market, which in simple terms revolves around bull and bear markets.
In a bull market, its main tasks are:
Provide opportunities for Token buyers of any size;
make people feel FOMO;
Conversely, the key tasks in a bear market are:
Buy Token as cheaply as possible to welcome the next bull market;
Do some daily trading volume on CEXes to avoid being delisted;
The price of Token listed on CEX depends on:
the popularity of the CEX;
the popularity of the project;
the current stage of the market;
other factors;
As such, it can range from free to millions of dollars. According to its transaction volume, there are 3 levels of CEX:
Level 1: Binance, Kucoin and OKX (real users, high purchasing power, high listing price).
Second level: Gate, MEXC and Huobi (low purchasing power, low listing price).
The third level: Lbank, Bitrue, etc.
How to identify the cooperation behind the market maker and Token:
Tokens skyrocket ahead of major news releases.
Trading volumes increased steadily, but there were no major price movements.
Repeating patterns on a chart (for example, spikes and dips every two months).
There are true and false trading volumes. Some volume is real human trading, while some volume is caused by human bot orders executed by market makers between their accounts.
How to identify these fake volumes? Please execute a $5-10 buy order:
If the seller's orders are changing quickly and you can't get a small deal, there may be fake volume in the currency pair.
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