Looking at crypto, I must say that it is like a digital wild west where fortunes are made or destroyed overnight with just one keystroke. Memecoin prices can explode overniight printing millions and becoming a million dollar market. Welcome to the digital gold rush, where one tweet from an influential account can decide your fortune. 

Unfortunately, there is also a bad side of this digital gold rush, one wrong key click can turn fortunes into dust very fast. But, whats life without risks? The promise or hope for making a fortune alone is enough to send many into a frenzy. There is a common phrase that does its rounds among degens, “no risk, no lambo”. 

The thrill of high risks and high rewards is appealing to people of all backgrounds and this makes it easy for whales to play everyone right in their palms.

Welcome to crypto, a looting scheme in which one tweet from a whale will send people into a frenzy and where whales manipulate the markets to profit from new investors and the greedy!

The hype machine that is a trap

Usually before a big dump, whales will salivate with great hunger for profits. Like starving wolves, they will find new prey for meat to fill up they stomachs. And there are two types of prey that they are looking for. One is a new investor who follows the hype, and the other may be you a greedy investor with no investment or trading plan!

With their targets confused, they encircle the prey using various methods.

This includes creating a social media frenzy by paying your favourite influencers who are the whale’s favourite shill machine. As you woke up from that dusty rented apartment, you will see the headlines and shills from the influencers. 

“Bitcoin to $200 K is confirmed, I am going all in”; but how will you know that your favourite influencer is working for their supper. 

So, full margin, in you go with all your savings hoping to come out of the trenches. Well, you have just been played mate and have just dug the trench deeper.

Institutional FOMO is another tactic they use. You will start seeing huge institutions like investment firms, big banks and governments announcing that they will be buying more of that coin. My little investor will then think, “with all the suits going in, it must be safe”. Well, you fell for the trap and I feel pity for your pocket my guy.

The last trap that new investors and greedy people usually fall for is that of memes and hype cycles. Your favourite paid influencer is always shouting we are in early, we are still early. Well, you will think you are early and enter, while Mr token creator is holding their keyboard tightly, at ready to strike sell button and secure the bag. And in seconds you will be left with a useless memecoin that noone will buy. Well, RIP to your money again.

The perfect fakeout traps 

Whales are clever, when price nears a psychological resistance levels, they start to unload their bags slowly. They do it so subtly and carefully so as not to spook the fish. You might be wondering how do they manage this; well its simple they:

• they can spoof you by placing fake buy orders to make it look like demand is skyrocketing, then cancel them the last second trapping the fishes in a net of losses.

• they can short the market while encouraging you to enter buy full margin using over leveraged positions at x100. Well, its a buy, but your over leveraged postion will be liquidated in seconds if the prices dips a little. And that is what the whales are waiting for to buy cheap before the pump.

• Use the smart money dump, by selling slowly into the rally. The price will hit an all time high and then dump quickly liquidating late and leveraged retail buyers. 

The scenario on the last point happened recently on bitcoin when it broke past $126000 and then immediately dumped to around $121000. This occurred because there were massive sell offs at the top. Many retailers were taken out but the whales sold high and bought bitcoin cheaper.

We thank you for the liquidity rugpulls

Well after dumping their bags on you and liquidating you, the whales are just not done yet, because they have a very big appetite. 

First they will hunt for your stop loss or liquidation prices causing a domino effect of massive sell offs. Well, that means we will buy it cheap suckers! So, stop losses must be destroyed and the small fish must be liquidated and used for food.

As if hunting your stop loss is not enough, whales will also use fear mongering tactics to force you into panic selling if you survive the stop hunts. Well, they just got paid from your stupidity so, they can pay someone else to spread fear, through panic striken paid influencers and media houses. You will see headline exaggerating market crashes even if nothing happened. Well, with fear of losing everything will make you sell.

After this they can inject small capital into the market to trick you into thinking that price is now going up. Well, Mr investor, the moment you buy, we will sell to you and market will dump further liquidating you. After, it dumps further, whales buy again cheaper while you hold and pray against your losing streak.

Now, this is what I call market brutality.

So, why do this keep happening

If you read this far, then I have all reasons to congratulate you! You, now know how whales profit from manipulating newbies, but it does not mean that you are safe.

This is because in crypto, FOMO makes even intelligent and knowledgeable people very dumb. So, there is always someone who will buy the top and the whales will swim in profits. And these whales will need a fool, which they need you to be. 

This also happens because crypto has no strict regulation, this means whales can manipulate order books, pump and dump and front run retail traders using bot trading with no consequences.

Lastly, if you are emotionally weak crypto, will be your slaughter house. FOMO will make you buy the top and you will lose. Fear makes you sell the bottom and buy the top instead of holding till you are in profit. And finally hope will make you hold losing trades for long while your bags are disappearing.

Whales have studied these emotions and they know how to exploit them like a casino. It does not mean that there are no stupid whales though.

How you can avoid being whale food as a small fish (Retail trader)

• Stop listening to gurus and do your own analysis. If someone is screaming buy, they are either a paid influencer shill or a whale themselves. So, you need to research and know why they are screaming buy.

• Watch whales on whale alerts, monitor exchange transactions on galassnode and analyse whale activity on cryptoquant.

• To not abuse leverage, many people recommend using the lowest leverage available or not using it at all. leverage gives higher rewards but also higher losses.

• Dollar cost average to avoid going all in at the top. Buy small amounts of crypto regularly. This will reduce overexposure to a single price.

• Treat every rally and drop as a trap. If you don't learn the difference between ATH breaks and traps, you will be left counting your losses each and every time.

Conclusion

In crypto the house always wins, but we can always steal some cheaps and eat too. You should know that unless regulators step in, which would kill he whole essence of crypto, whales will always feast. So, until then, I recommend you trade smart, treat every shill as a suspect and never forget that a retailer trader is not a hunter but is fat prey for the whale.

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