A Crypto Story: The Media, The Manipulators, And The Brutal Market

Pay attention if you want to survive the crypto onslaught

The Media

Throughout the course of history, the media has played a pivotal role in the progress of our society. Whether it is leaving a union, electing a president, or portraying the use of AI and technology, the media influences the way we think about an issue. This phenomenon has been much discussed in the Agenda Setting Theory, which suggests that the media filters and shapes our reality, and they too can sway the sentiments in the cryptocurrency market today.

One commonly heard term in crypto is FUD, which stands for Fear, Uncertainty, and Doubt. The term dates back to the early days of the computer hardware industry where informed and educated individuals spread misinformation about the technology so as to spread fear among the uninformed and ignorant masses.

While FUD was then used as a tactic to get consumers to stay away from competitors’ product, vested individuals today propagate FUD through the media with the aim of casting anxiety and confusion amongst crypto investors so that they will exit the market. Prices of cryptocurrencies will then fall, creating opportunities for these fearmongers to buy in at discounted prices.

The truth is, cryptocurrency and distributed ledger technology is a complex topic, which is why there is a flurry of mixed opinions being presented in mainstream media today. It is no surprise then that even the CEO of JPMorgan, Jamie Dimon, has no idea which side of the fence he is on. Or does he?

In normal circumstances, positive sentiments trigger price rise and negative sentiments cause prices to drop. However, that is not entirely applicable in the crypto market.

Most of us who are invested in cryptocurrencies should have observed in the past months that positive sentiments have limited effects in raising prices while negative sentiments still drive prices down. Why is this so? Is it just the effect of a bear market and prices generally just goes south?

Photo by Jean-Philippe Delberghe, Unsplash.

The Manipulators

Enter the market manipulators. I have written about the manipulated crypto market before and it seems highly plausible that the false market recoveries in April (post-tax season) and July (ETF, CoinBase, and BlackRock rumours) this year are a work of the media or the manipulators.

And who is to say that the media and the manipulators comprise of different groups of people? Fabricating and disseminating a rumour has never been easier with the ease of access to websites and social media, which means that anyone with the know-how and enough resources can influence the market.

Nonetheless, if you have followed the technical indicators, it would have seemed more probable that we are still in a bearish trend and prices would be dropping further. Putting aside the causes for the false reversals, why is it then that the market rises but is unable to break beyond those price levels and instead reverses lower?

There are two simple reasons for that.

1. Price suppression by market makers.

The whales can sell off their Bitcoin holdings and suppress prices. Why would they? Because they can, so why would they not? When most people panic, lose faith and sell off their cryptoassets, that is when the whales can buy back in for cheap.

2. No substantial funds entering the market.

There is a certain price pattern that you can observe when there is a ginormous entry into the crypto market; I write about this in my upcoming book. This has been observed time and again during the market lows.

Similarly, the spectacular rise of Bitcoin’s price and that of other cryptocurrencies in 2017 came right after one such pattern, along with the announcement of Bitcoin future contracts. Many people rode along the huge momentum upwards but the ones who profited are the ones who exited.

During the April and July price climbs, there were no signs of a major buy in. Hence, the market was driven mainly by the huge positive sentiments but was still largely subdued.

The Market

The crypto market is volatile, unpredictable, ruthless, and poses a lot more risks than traditional markets. However, these uncertainties present opportunities for those who care to learn about it.

If there is anything you should take away from this short story, it is to be wary and aware of what the media is presenting to you. As an investor, or should I say speculator, you should also be looking out for qualitative factors that will drive the market and not be narrowly focused on prices or technical indicators.

Media will have an impact on cryptocurrency. In the short term, the media affects adoption and causes price fluctuations in the market. In the long run, distributed ledger technology and its applications will speak for itself.

The Prologue

Once again, negative news has hit the crypto market big time this week. SEC is postponing the decision of Bitcoin ETF to September and the poor sentiments have led to new market lows since October 2017.

Sure, September is just a month away. So what does that mean for us investors? More importantly, what does that mean for the market makers?

Do not get me wrong. I think that the media and manipulators play a critical role in advancing cryptocurrencies. They teach us a lesson, whether it is through information or through painful losses, and it is them who spark movement and growth in the crypto space.

A month or two is plenty of time for a dip and a recovery but that is just my opinion; it should not be taken as investment advice. If anything, listen to Warren Buffett, who advises against cryptocurrencies instead.

“Be fearful when others are greedy, and greedy when others are fearful.” — Warren Buffett

If you are looking to get started on cryptocurrencies, check out my Complete Crypto Starting Guide. You can also support me by signing up for my crypto mailing list for monthly insights on the crypto market.

Oh, and I’ll be releasing a book on crypto investing next month. Stay tuned!