Whale Traps: How Big Players Manipulate the Crypto Market
In cryptocurrency markets, whale traps are strategies where large holders, known as “whales,” manipulate prices to influence smaller investors into making risky moves. Here’s how it typically unfolds:
1. The Pump: Whales buy up a large amount of a cryptocurrency, driving its price up quickly. This sudden surge generates FOMO (fear of missing out) among retail investors, enticing them to jump in, thinking the asset will keep climbing.
2. The Dump: Once the price hits a peak and smaller investors are heavily involved, whales offload their holdings. This sell-off causes the price to crash, leaving retail investors with steep losses as the whales secure their profits.
Essentially, whale traps benefit large players by creating misleading market signals. To avoid falling for these traps, traders should be cautious of sudden, unexplained price jumps and watch for unusually large buy or sell orders.
