By making large buy or sell orders, whales can manipulate the market in various ways. Whales also use the pump-and-dump method, where they push the price of a token up by buying large amounts in a short time. Soon after that, they sell their holdings when the price peaks, causing it to crash. Another strategy is spoofing, which is the placing of false orders.
Because there are no crypto rules, whales can do this more easily. In traditional financial markets, individuals closely monitor institutional trading to prevent manipulation, but this is not the case in the crypto markets. Despite blockchain technology revealing whale activity, traders find it difficult to predict what whales will do next.
Retail traders must be careful and have a strategy to be safe. Always track the movements of whales, don’t make any impulsive trades out of FOMO, and use stop-loss orders to avoid giant losses. If you want to take on crypto, do ample research before investing.
Will there be new rules that stop the whales or big players in the market from manipulating the crypto market, or will they stay free-roaming in the same market? The battle for a fair and transparent crypto ecosystem is far from over, and what happens will impact the future of digital finances.
