Can a surplus lead to price manipulation in the digital currency market?

3 answers

• Dec 25, 2021 · 3 years ago
  Yes, a surplus of a specific cryptocurrency can potentially lead to price manipulation in the digital currency market. When there is an excess supply of a cryptocurrency, it can create an imbalance between supply and demand, allowing manipulators to artificially influence the price. They can buy large quantities of the cryptocurrency at a lower price, creating a false sense of demand and driving up the price. This practice is known as 'pump and dump' and is a common form of price manipulation in the digital currency market.
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• Dec 25, 2021 · 3 years ago
  Definitely! When there is a surplus of a digital currency, it becomes easier for manipulators to control the price. They can accumulate a large amount of the cryptocurrency at a lower price and then create a false sense of demand by promoting it heavily. This can attract other investors to buy the cryptocurrency, driving up the price. Once the price reaches a certain level, the manipulators sell their holdings, causing the price to crash. It's a classic case of market manipulation.
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• Dec 25, 2021 · 3 years ago
  While a surplus of a specific cryptocurrency can create opportunities for price manipulation, it's important to note that not all surpluses lead to manipulation. Market dynamics, investor sentiment, and other factors also play a significant role. However, it is crucial for investors to be aware of the potential risks associated with surpluses and to conduct thorough research before making any investment decisions. By staying informed and vigilant, investors can minimize the impact of price manipulation in the digital currency market.
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