I do not exactly know what goes on behind the scenes when a coin/token gets listed but you'll know that a team behind a platform knows what their doing because the maintained volume for their coins is always high right from the beginning. A prime example of this is Ethereum.
It would be naive to think that the market activity will just come without some kind of manipulation going on to jump start trading.
It would be naive to think that the market activity will just come without some kind of manipulation going on to jump start trading.
Wow! So manipulation or die in your opinion?
I am thinking tokeweed is correct:
Thanks for the links and discussion. I still can not for the life of me wrap my head around the "volume" of alt coins traded recently. With no transparency into these exchanges, we have no idea what is going on behind the scenes. I'll put dollars to doughnuts there is more then meets the eye.
It is obvious that the high volume are the insiders buying from themselves in order to control the market price.
The way this works is that if you flood the exchange with high bids and high asks, then the small volume of actually lower asks is insignificant and minor cost for the insider. For example let's say the insider is 99% of the volume (using Sybil identities on the exchange), then the 1% that wants to sell is an insignificant cost to the insider, because the manipulation of the price drives more speculator demand on the bid side than on the ask side.
So in this way, the insider is actually unloading tokens at higher and higher prices. This games goes on until the insiders have unloaded their tokens at nosebleed prices. Then it collapses.
In Ethereum's case, it was alleged by the Dao attacker that the insiders are using their tokens as margin to do margin trades to provide more upside price leverage manipulation. So first you use your tokens buying from yourself to pump up the price, then you use your ETH to short the ETH price, and start selling tokens rapidly to cause a crash in price. You cover your shorts, and repeat the process again driving the price up. But you don't crash the price too far, so as to keep the dream alive. Having very good marketing also helps.
This is why we often see a huge decline in the price after the initial ICO pump, as this enables the insiders to accumulate tokens very cheaply and then the upward price manipulation begins.
Note the insiders need to make sure they are the only large holders, so no one can compete with them and for example sell into their pump.
It seems if you don't do this manipulation, then your token will be scorned by speculators and your reputation as altcoin developers will be tarnished.
The developers if they are honest, will take their funding and continue to work hard. The market manipulators are going to come in and buy up any good coin and pump it. The only way to stop that would be for the developer (and/or the community) to hold the coins tight fisted, but then this creates a dead market such as Monero which has never seen more than 4X gain after the initial pump by rpietila.
So what can an honest developer do
He has no choice but to let the speculators have what they want. The important thing is the developer is funded and able to drive the ecosystem to success. If so, then the downside price crash will be limited or at least a great buying opportunity. Fundamental development (coding) and marketing matters.But alas, DEX is going to be scorned because the manipulators can't operate there. Or can they? Speculators will go where the (manipulated) volume is.
Speculators learn to play the game.
I do not exactly know what goes on behind the scenes when a coin/token gets listed but you'll know that a team behind a platform knows what their doing because the maintained volume for their coins is always high right from the beginning. A prime example of this is Ethereum.
It would be naive to think that the market activity will just come without some kind of manipulation going on to jump start trading.
It would be naive to think that the market activity will just come without some kind of manipulation going on to jump start trading.
Wow! So manipulation or die in your opinion?
Nope, I'm neutral. But that's reality. It's all I'm saying.
I had sort of religious transformation of sorts and come out of my dogmatic cave to see the light of day.
1. When no whale is supporting the volume and price by manipulating with his tokens, then the price will decline and thus a whale will be able to accumulate low and then begin manipulating. So preventing manipulation is really difficult. Monero seems to have been able to do it, by selling "holier than thou" Jim Jones koolaid locking their supporters into a perpetually underperforming token but most other tokens aren't able to achieve this Zen masochism:
http://coinmarketcap.com/currencies/monero/
Note XMR has good volume though. So it has apparently some savvy traders who employ leverage.
2. Thus we might as well as accept that manipulation is really just trading. When speculators play, they must understand the rules. And that is there are no rules preventing manipulation. Thus to be competitive, manipulation is part of the game.
3. A coin developer has the choice of letting someone else do the manipulation for him (e.g. Bobsurplus and destroy the token such as Bitbay), or do it themselves so as to more beneficially maximize the long-term value of the token and project.
Wall Street has been using tactics that employ manipulation to great effect. I don't know why it would be different in crypto. If you think it's dirty now, wait until the experts of Wall Street enter the scene.
)) !!!
