We are not just a few weeks into 2023 and crypto prices are rising. If you see the number going up, it may entice you to throw some money into Bitcoin or Ethereum. After all, maybe this is the start of a new crypto bull market? You wouldn’t want to miss it!
Well, wait a minute. Consider this first: why are crypto prices suddenly rising?
There are plenty of analysts trying to make sense of the recent rise in the value of cryptocurrencies – inflation is to slow downthe belief that the Federal Reserve is done with rate hikes, bullish news on crypto – but no, it’s not really.
There is no major positive news in the industry. There are no reports of some new common ways of adoption. Sure, the stock market is now up a bit in the new year, but not at the same level as cryptocurrency.
What is going on here? Market manipulation.
Bitcoin is soaring high, but not going to the moon any time soon
Bitcoin hovers above $21,000 in mid-January, a price not seen since early November 2022. That was before the collapse of FTX, one of the largest crypto exchanges in the world. Crypto took a hit in 2022, when major stablecoins, lenders, and other crypto companies failed, causing domino effects across the industry.
However, things are not looking good. While one of the most tumultuous years for crypto is behind us, 2023 hasn’t treated crypto much better so far with the failure of Gemini Earn and the offices of cryptocurrency lender Nexo raids about allegations of illegal activity. There is no good news on the horizon. In addition, most retail inventors are now seeing cryptocurrency as well riskyso who buys?
David Gerard, a longtime writer and critic of cryptocurrency, explains: The big players in the industry “buy” to control the market.
“Bitcoin price is what the big players need,” writes Gerard. “The market is very thin and trivially manipulable with the billions of pseudo-dollars in unsecured stablecoins on the unregulated offshore exchanges. The price has to be high enough that the loans from the big boys are not liquidated; but it has to be low enough so the bagholders don’t try to cash out.”
John Reed Stark, a former SEC official, agreed with Gerard’s assessment.
“A recent one Forbes analysis of 157 crypto exchanges found that 51 percent of daily reported bitcoin trading volume was likely fake,” tweeted Stark, referring to a Forbes report from last summer.
Who does the purchasing? It’s not clear
A more recent National Bureau of Economic Research study found that “wash trades accounted for up to 70 percent of all transactions on non-compliant crypto exchanges, suggesting that most transactions on these platforms are fraudulent.”
Wash trading is basically when an investor trades with himself to make it seem like there is activity in the market to increase value. In short, it is market manipulation.
So when you hear investment advice from the likes of Anthony Scaramucci, the man who spent about 10 days as communications director for the Trump White House in 2017, proceed with caution. Scaramucci now runs an investment firm called SkyBridge Capital and recently shared that CNBC that 2023 will be a “recovery year” for Bitcoin, with prices skyrocketing to new highs within two or three years.
It’s important to note that 30 percent belonged to SkyBridge Capital bought out by FTX about two months before the stock market collapsed. The company made significant crypto investments with the tens of millions from that deal just before crypto sank even further. Scaramucci recently said that he hopes SkyBridge can buy back the share it sold to FTX. So it’s not too shocking for Scaramucci to spread “good vibes” for crypto so the company can recoup their investments.
It’s just another way the big crypto companies and investment funds are manipulating the market.