The big banks have manipulated the prices of financial instruments, and they still do. But they have also started to manipulate the price of Bitcoin for a while.
I’m not the one to say this. For example, according to a new Bloomberg report, a group of traders at some of the largest banks in the world are using a technique known as “spoofing” to manipulate the price of Bitcoin.
Spoofing involves placing fake pending orders on it in order to fool other traders into thinking there is more demand for a good than there really is.
Pending orders are nothing more than automatic buy orders, already placed on the trading chart, at a certain price level.
Retail traders see this interest and think the market will then go up. But when the price is about to approach, pending orders are removed and the market price reverses.
All the people get screwed.
Please note that these are transactions (those pending which are then canceled) that occur quickly. Even in trading done with algorithms called high-frequency trading.
The report specifically names JPMorgan Chase, HSBC, and Deutsche Bank involved in this manipulative trading activity.
But that’s just one example of how the market can be manipulated. The fact is that for some time now even with Bitcoin they have been in charge.
JPMorgan Chase has been fined multiple times for manipulating other markets as well.
So it’s really no surprise that these banks are involved in manipulating the price of Bitcoin.
What is surprising, however, is that they have been able to do it for so long without anyone noticing these unlawful methods.
WHAT MOVES THE MARKET IN FINANCIAL INSTRUMENTS?
1 – Emotions
One of the main causes that determine the price movement of any financial instrument is the emotionality of large and small traders.
These behaviors are reflected in any index, monetary currency, or commodity.
It happens when there is a war or a pandemic and everyone sells out of fear. Or there is important support or an important trendline and everyone is selling or buying because they are convinced the price will react. Or it sells because the market has gone against it and we take a heavy loss.
In short, all decisions are made for the most part on the wave of emotions. This way how Bitcoin and the main cryptocurrencies also moved at the beginning and until recently.
There are many people out there who believe that whales are driving the market. This isn’t entirely wrong, but it’s not entirely right either.
Whales have a lot of power and can definitely move the market (I’ll explain that below). But they are not the only ones.
Whales are the big investors, the ones with a lot of money. But there are also other investors, like you and me, who have less money. But there are many of us.
So if all the other investors do the same thing, then the price quickly goes in one direction and most importantly takes a direction. In short, for trust or mistrust.
Therefore the mass that buys or sells Bitcoin affects its price. A bit like what happens with all material goods on the market.
Then there is another great force that moves the price of financial instruments. Obviously, these are not the only ones but the most important.
2 – Banks and investment funds
The other great force that moves the market, not only of Bitcoin but of all financial instruments, are banks and investment funds.
How do the banks move the price?
Banks have huge reserves of money. They can buy or sell as they please and in any quantity. When a bank starts buying, it is normal for the price to go up.
Because the operation of a bank is as good as that of thousands if not millions of people who buy or sell together.
This happens because when there is more demand for a good than is available, the price goes up.
Since the money that people put into Bitcoin has increased, then banks have also become interested in manipulating the price of Bitcoin.
I’m not talking about central banks. For example, the British central bank manipulates the pound. Which is normal. They do it for their country’s monetary policy.
I’m talking about investment banks. Their aim is to make money on the market to perform on their capital at the end of the year.
WHY WERE BANKS INTERESTED IN BITCOIN?
JPMorgan Chase, one of the largest banks in the United States, has bought large quantities of Bitcoin.
According to reports, JPMorgan Chase bought Bitcoin for its clients through its investment arm, JP Morgan Asset Management.
The bank has also created a team dedicated to cryptocurrency trading.
This is a clear sign the big banks are now involved in manipulating the price of Bitcoin.
The answer to the question is simple: they operate where there is money. Because in markets where there are avalanches of money they can make a lot of money.
So as soon as interest increased, they threw themselves headlong into being the bosses.
Obviously, they make money by losing small trades and some investment funds by manipulating the market.
NOT EVERYTHING CAN BE THROWN
In fact, market manipulation is not totally negative.
If there were not these big players to increase the price, many markets would probably move much less.
Therefore with very directional tools, they get opportunities to make profits and ride the movements.
The fact remains that you have to be really good and understand what they are doing.
Otherwise, you end up being one of the many little fish caught in the net and you will lose money to them.
One thing is certain: if there is someone who gains, there are others who lose.
The statistics speak of over 70% of traders losing money.
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