The Dangers of Market Manipulation in Cryptocurrency Trading

Cryptocurrency market value slumps under $1 trillion
  • Market makers manipulate charts through tactics like fake pumps to grab liquidity.
  • These manipulative moves are designed to confuse traders and profit off their emotional reactions.
  • Traders are advised to exercise caution and not to chase the peak or follow irrational market behaviors.

In the world of cryptocurrency trading, market makers have a notorious reputation for manipulation, particularly through tactics known as ‘fake pumps.’ These are designed to confuse traders, turning them into easy prey for profit-making schemes.

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Imagine you’ve shorted Bitcoin (BTC) at $30,000, expecting a decline. Suddenly, BTC falls to $25,000, and it looks like you’re in the money. However, this could very well be a set-up. BTC may rebound to $26,800, making you think you should close your short position. Just as you do, market makers may initiate a fake pump, driving the price back up to $30,000 or higher. Trapped, you may now see BTC crash down even further, possibly to $20,000, eating up your profits and then some.

Market makers aren’t in the business of giving away money. They thrive in the chaos of volatile markets, manipulating emotional reactions of fear and greed for their advantage. These manipulations usually happen in the deepest parts of a bear market, especially when volatility and volume are low. The goal is to trick traders into believing a certain trend is developing, only to reverse it suddenly, capturing the liquidity from those who fell for the trap.

Given these dangers, traders should be extremely cautious. Impulsive decisions, often fueled by irrational behaviors like FOMO (Fear of Missing Out), can cost you dearly. Always be aware of your emotional state and make sure you are not chasing market peaks or lows based on market manipulations.

When it comes to market manipulation, it’s crucial to remain patient and not rush into trades. Monitoring market signals and the entry of rational, seasoned traders can offer better indications of a safe trading environment. Remember, those who rush in late often suffer the most.


Market makers often use tactics like fake pumps to manipulate traders and grab liquidity. By understanding these strategies and maintaining a disciplined approach to trading, you can protect yourself from falling into such traps.

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