Why the crypto sphere is watching the evolution of the stablecoin tether very closely

These groups that manipulate crypto prices using the old “kettle” technique

In mid-May, the price of the Enzyme cryptocurrency rose sharply before falling, with a very high trading volume. A group of speculators enticed many individuals to buy, while reselling the crypto on their behalf.

Some speculators are stirring up the cryptocurrency market, which is currently going through a complicated period. A cryptocurrency whose price suddenly jumps before falling: speculators, organized in groups, no longer hesitate to launch lightning operations to artificially inflate the value of these highly volatile digital assets and quickly reap profits.

On May 15, an obscure cryptocurrency, Enzyme, went from 45 dollars to 26 dollars in a few hours, with a very high volume of transactions. A few hours later, it plummeted and is now only worth around $27.

At the origin of this movement: a Telegram messaging group on which several investors chose their target before taking action.

“On the stock markets, it is illegal, but criminals take advantage of the less severe regulatory framework for cryptocurrencies,” explains Mircea Mihaescu, of the specialized company Coinfirm.

On the stock market, there is also a specific term to talk about this kind of practice: it is the “boiler room” or technique of the kettle. This involves distilling false information (and/or strongly encouraging many individuals to buy a security) to drive up the price of an asset (in which one is already invested) and resell it quickly to pocket more -value. New investors, on the other hand, most often find themselves at a loss after having bought at the highest. Price manipulation prohibited on regulated markets but this prohibition does not apply to cryptos.

To give more scale to their action on the Enzyme, the investors of the Telegram group also used a general public social network, Twitter in this case, in order to encourage other people to invest as well.

“Whales (nicknames of big investors, editor’s note) collect lots of MLN (the abbreviated name of Enzyme on the markets, editor’s note), it’s worth a try”, for example tweeted a certain Cryptosanta.

Enzyme Finance, the company that manages the cryptocurrency, tried to calm things down, warning to be wary of “fake accounts” that sought to suddenly inflate its value. But it was too late and many investors had already embarked on a perilous process: buy and then sell fast enough before the soufflé fell and demand dried up.

A phenomenon that is not isolated

Almost all lost because in these schemes it is essential to act very quickly. For the Enzyme, the bullish push indeed lasted only a few minutes and the only ones who had a chance of not losing money were the initiators of the movement. “In all these manipulations, everyone is convinced of being” the one who will benefit from the rise in the price, explains behavioral economist Stuart Mills, of the London School of Economics.

The phenomenon is not isolated. Other groups are promoting a similar operation in the coming days. According to data scientist Matt Ranger, most of these actions are launched by people who have a strong marketing acumen above all else.

“You don’t need to know how to write a line of code,” he points out. You just need to know how to write messages that resonate with investors in cryptoassets, for example by taking up the theme of the failure of major economic institutions.

“My turn to trick the others”

Conspiracy theories abound and some suspect large American investment funds of having orchestrated the current sinking of cryptocurrencies, to then buy them at a good price.

“All of a sudden, all this unethical behavior becomes more justified” with these theories, notes Stuart Mills. Because the speculators say to themselves: “I got tricked, so it’s my turn to trick the others”.

The recent decline in demand for cryptocurrencies and the resulting decline in prices, however, makes these operations all the more dangerous.

“The only buy orders come from these people on Telegram or Twitter,” warns Matt Ranger. So, at some point, with no real demand from lamba investors for the targeted cryptocurrency, “everything collapses”, he underlines.

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