The cryptocurrency market is decentralized, meaning that no single governing body sets the rules. As a result, market manipulation is increasingly common.

Manipulation is a term that can be defined in a number of ways. The most recent example is the GameStop scenario. Using different social media such as Twitter, Reddit, and Telegram, people started to buy the share of the company which rose the price to almost 1500% in total. This didn’t go in favor of everyone as some hedge funds held short positions.

Similar events have occurred as a result of Elon Musk’s tweets about particular coins that have surged to provide investors with large profits. Before the crisis, Dogecoin rose and reached a price of nearly $0.7. Many other coins have shown comparable reactions to popular and powerful people’s acts.

Rug Pulls and DEXs

With the use of FUDs, news, and important persons, a large number of coins have been manipulated. The rug has been ripped out from under the coins. Rug pulling is a practice in which developers and individuals with a large number of assets sell all of their assets on the market, lowering the price to the lowest possible level. They quit the project and flee with the money from the investors.

This assists them in attracting as many people as possible to invest in their scheme. After a number of people have invested in the project and they are hoping that the price would rise, the devs just suck all the liquidity present and we see damage to the project and eventually, the price of the coin goes back to zero.. On decentralized exchanges (DEXs), where people issue new tokens and subsequently trade them for large currencies like Ethereum, this type of behavior is prevalent. Rug pulls are widespread on decentralized exchanges, when tokens are listed without any form of audit or inquiry, in a contrast to centralized exchanges, where the project is thoroughly investigated. Another possible rug pull is a coin whose value has surged in a matter of hours or even minutes.

A many numbers of cases have come to the public where quite notable people were caught in the rug pull schemes. The reputations of such influencers vanish but the damage they had to do had been done already. This is why its very important to do your own research and come to a viable conclusion yourself. This so you don’t have to rely on anyone else out in the market.