Crypto whales (large investors) can have an enormous influence on the price of a Cryptocurrency exercise. A frequently used strategy is the so -called Bear Raid. This phenomenon is relatively unknown, but is often used – with all consequences. Crypto whales specifically trigger price declines to benefit from the panic of smaller investors.
What is a Bear Raid in the crypto world?
A Bear Raid is a strategy of whales where you start a large -scale sale. In this way you can, for example, with Short-Positions or by returning to lower prices. A Bear Raid begins with the fact that whales specifically throw large quantities of a certain tokens onto the market. As a result, the offer increases suddenly, which leads to a quick drop in price.
Social media is often used to spread negative messages – the so -called Fear, UncertaAnty and Doubt (fud). This negative news flow via the project or the token influences the market assembly. As a result, smaller investors panically sell their tokens with considerable losses.
Well-known examples of crypto crashes
There are some notorious examples of Bear Raids with far -reaching consequences:
- The Terra-Luna crash in May 2022: The well -known collapse, which pushed the cryptom market deeper into the bear market, led to enormous losses – especially among small investors. An investigation The Bank for International Settlements (bis) found that whales made considerable profits from this crisis.
- The FTX crisis in November 2022: Also when the whales sold in advance of the FTX crypto tour, huge amounts of tokens – with again negative consequences for smaller investors.
- The BitConnect shutdown in January 2018: Not a classic Bear Raid, but also a crash of 90 %caused by whales. In combination with FUD, small investors sold panic and suffered high losses.
How do you recognize Bear Raids – and what can investors do?
A Bear RAID can lead to considerable losses – but there are indications that investors can recognize in order to protect themselves. A sign is a sudden drop in price for no clear reason, often followed by a quick relaxation. An unexpected increase in the commercial volume during the drop in price can also be an indicator.
There are several measures that can protect against a Bear Raid:
- Diversification: A broad portfolio over various cryptocurrencies protects against targeted manipulations of a single token.
- Stop loss with caution: This function automatically sells your coins with a strong drop in the price to limit losses. But with a Bear Raid, this is counterproductive – because the short price plate plays into the hands of the whales. Active market observation is more effective in this case.
- Trade on regulated stock exchanges: These offer more protection against manipulation than smaller, unregulated trading places.
- Whale transactions observe: Services such as Whale Alerts provide information about large transactions and can point out potential manipulations at an early stage.