Crypto Influencer Goes Viral Pointing Out 'How Market Makers Manipulate Prices'

Pseudonymous cryptocurrency influencer Rekt Fencer highlighted in a viral thread on X (formerly Twitter) how market makers manipulate prices and help traders to make millions.

What Happened: Rekt Fencer shared valuable insights about the strategies employed by market makers (MMs) and how traders can potentially profit from understanding these tactics. The two types of MMs:

• Traditional market makers: they focus on large projects and huge market caps, offer liquidity and market depth, keep the market running smoothly and efficiently and create a trading plan for token unlocks.
• Market makers who serve as project advisors: they help to raise funds for the project, provide liquidity decentralized exchanges and develop strategies for token prices.

Rekt Fencer points out the importance of market makers:

• They facilitate trading on exchanges by consistently providing bids and asks for tokens.
• They profit from the spread between these prices compensating them for the risk of holding assets.

The influencer details how market makers influence token prices using pumps, dumps or distributions, depending on their objectives.

In bull runs, they create fear of missing out (FOMO). In bear cycles, they accumulate at low prices to maintain sufficient trading volume.

Price Manipulation

It's tough to hold a coin during a long decline, and Market Makers exploit this.

When prices are manipulated to hit new lows, it often scares off most holders.

But if the price swiftly rebounds back into the normal range, it's likely a manipulative play. pic.twitter.com/IufXsgK3sS

— Rekt Fencer (@rektfencer) April 22, 2024

Also Read: Dogecoin, Shiba Inu And Who Else? How Meme Coins Have Evolved Since The Last Bitcoin Halving

Why It Matters: Recognizing the presence of market makers is crucial for traders.

Analyzing price charts for indicators such as sharp pumps before significant news, steadily rising volume without substantial price changes and repeated patterns of pumps and dumps can help identify their activities.

However, investors should be cautious of MM tactics like pushing prices to new lows to scare off holders, only to have the price swiftly rebound.

Rekt Fencer points out to how DWFLabs, a market maker, worked for Floki FLOKI/USD after accumulating their position for several months during a sideways trend. Then, they pumped the token by 772% in just three weeks.

Floki is one of the most notable coins that set out to catch up in valuation to Shiba Inu SHIB/USD, being famously volatile. Whether market makers influence the trading behavior of Shiba Inu or other major cryptocurrencies cannot be established with certainty.

The tweet concludes with the trader advising, traders to buy during the accumulation stages and sell during the distribution stages which will assist in maximizing profits.

What's Next: The influence of meme coins and Bitcoin as an institutional asset class are topics expected to be thoroughly explored at Benzinga's upcoming Future of Digital Assets event on Nov. 19.

Read Next: Crypto Trader Explains Why Middle East Billionaires Are Suddenly Interested In Launching Meme Coins

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image: Shutterstock