This exactly is the problem, dumping earns a lot of people a lot of money. Start with 1000 BTC, dump them @ $480. When panic sell starts (and it always start) buy back at $465.
Is this sort of pure buy/sell manipulation actually profitable? Does it actually occur, in bitcoin or any other market? I would think that such manoeurvers are effective only if combined with suitable advertising or rumors.
I would guess that, in a pure "dump & slurp" manoeuver (as described above) there is a hight probability that the asks will not drop far enough after the dump, so that the average price paid by the trader on the "slurp" phase will be higher than the average price he got in the "dump" phase. Also, during the "slurp" he will be competing with other traders, who will eat away some of his expected gains.
It's not the game of probabilities, the dumpers don't throw dice, they use technical analysis. Of course they will sometimes miss the right selling/buying points, but by actually studying the market you can get that miss percentage far below 50%, i think it's actually closer to 70%:30% in favor of profitable dump/by back cycles. The main danger is not that percentage of successful trades falls under 50%, it's sudden big jump of price while they are exposed in fiat. To maneuver they use "stop loss" bots which quickly buy back into BTC in rare cases they got caught in price spike. Eventual one time loss is already covered by numerous previous successful cycles.
