Cryptocurrency Price Manipulation: How It Works and How to Spot It

cryptonews.com:

Cryptocurrency markets are known for their high volatility. As such, they can sometimes be susceptible to price manipulation. The nefarious practice involves artificially inflating or deflating the price of a cryptocurrency in an attempt to deceive traders or investors for personal gain.

You can easily spot it if you know what to look for. You can stay up to date with the latest developments and conduct price analysis according to data on Binance or other crypto exchanges. This guide aims to illustrate how price manipulation works and how you can identify it to protect yourself.

First, it’s worth looking at the different ways prices are manipulated in the crypto industry. Here are the most common ways nefarious traders manipulate crypto prices:

If you’re a tech wiz, you’ve likely heard of spoofing before. In the context of the cryptocurrency market, it involves buying or selling orders with the intention of canceling them before they are executed.

The idea is to create a false sense of supply and demand to influence the decisions of others. Layering is a step beyond that, where multiple instances of spoofing are done at different price levels to make it seem more natural.

In wash trading, a trader will simultaneously buy and sell the same asset. Similar to how spoofing creates an illusion, it creates an image of genuine trading activity. Its most common use is to give the impression of high liquidity in a particular cryptocurrency.

This is one of the most malicious schemes out there. In this two-stage attack, the price of crypto is inflated through false or misleading statements, often spread through social media or other channels.

Once that has been achieved, the attackers will sell off all of their holdings at a lower price,