Market Manipulation: Tactics of TradFi & Crypto-Native Whales

14 Nov 2023 by Rory Kejzerko 2 min read

As previously covered here on Crypto Presale, there are thousands upon thousands of crypto whales in existence.

However despite many of these being benign actors that’ve simply done a succinct job at securing their DeFi bags, a few ‘bad acting’ crypto whales continue to grow their portfolios through abusing their powers to manipulate markets.

Crypto whales who have the ability to make market-shaking impacts through their mammoth token bags can typically be categorised into two types: TradFi and crypto-native.

Here, TradFi whales are institutional investors and wealthy individuals that don’t typically trade crypto. On the other hand, crypto-native investors are institutions and entities that engage in crypto trading regardless of where the crypto market is at.

Intuitively, bull markets possess more participation from TradFi investors than bear markets given the attractive numbers in play. The consequence of such circumstance is that crypto becomes more correlated with other (similar) kinds of assets, such as tech stocks.

With their institutional might, TradFi whales often try to manipulate markets in order to make profits at the expense of retail investors. Typically, this can be done through artificially painting particular technical analysis trade patterns that they know unbeknownst traders would recognise - where from there, they then purposely violate them in order to extract as much profit as possible.

During bear markets, TradFi whales often leave, meaning the crypto industry is less tied to traditional markets. Instead, crypto-native whales take the front seat - a scenario that can also be observed through assets such as tech stocks decoupling from crypto.

In fact, this has been the case as of November 2023, which further means that such period marks a time wherein crypto whales are likely in control (and we’re still in a bear market).

When it comes to crypto-native whales, such actors also try to manipulate the market at the expense of retail investors. In differing from their TradFi counterparts, they typically do this by purposely pushing price levels above or below particular price levels that retail investors are watching, which then often leads to large liquidations.

Again, such action has been observed rather frequently in Q3 and Q4 2023, which is coherent with the notion that we’re still in a bear market that’s being run by crypto-native whales.

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