According to a recent study conducted by the Wall Street Journal, organized “trading groups” are responsible for creating price manipulations. Trading schemes known as “pump and dump” have made $825M in revenue since the beginning of the year.
Coordinated schemes allow traders to inflate and crash the prices of different cryptocurrencies. As a result, trading groups generate revenues for themselves, while other participants suffer losses once a particular asset is sold en masse. The WSJ revealed that coordination was managed via messengers like Telegram and social media platforms such as Twitter.
The study includes 175 trading schemes with 121 different coins. The WSJ claims that “many more such groups exist, potentially adding millions or ten millions more in activity.” These findings add weight to the market manipulation theories that have emerged in recent months. There is no consensus on this matter, however. There are those who name factors like the Mt. Gox liquidation sell-offs and the existence of major bagholders to be important reasons behind price fluctuations since the end of 2017. Others believe these types of activity have no significant influence on markets.