Crypto Whales Are Manipulating You!

You know that feeling when you buy a crypto and straight away it dips? We’ve all experienced it and likely all cursed ourselves for being the worst traders in the history of humanity as a result. Well, go easy on yourself because it may not be your fault.

Market manipulation in crypto is one of those uncomfortable realities which make being in this space a lot harder than it needs to be. Shadowy entities have levers that they can pull to rig the game in their favour and at our expense. But who are they and what tactics are they using to stiff us?

In today’s video, we lift the lid on the murky world of crypto market manipulation and shine some light into its murky depths. We look at what sort of entities are engaging in it and what means they have at their disposal. We also reveal some of the classic market manipulation scenarios that play out every day and give you some tips on how you can avoid getting burned by them.

You can watch that video here.

📈 Crypto Market Forecast 📈

After some unforeseen storms, it looks like crypto could get some clear skies again. Let’s start by addressing the cause of this bad weather - fears of further escalation in the Middle East. From a fundamental perspective, these fears seem to be overblown. This is simply because further escalation under the current Democrat administration would significantly increase the likelihood of a Democrat loss in November, hence the Biden admin’s refusal to support Israeli strikes on Iran.

From a technical perspective, oil prices only rose slightly in response to last week’s events, and gold appears to have experienced a minor sell off. Oil prices would have rallied much more if investors believed there was a real risk of further escalation. The small rally oil experienced was likely due to a short squeeze, as there are reportedly record levels of shorts on oil and gas. On the flipside, gold should have rallied more on fears of further escalation, but it sold off instead.

In the absence of further escalation then, the crypto market should stabilise and continue to be carried higher by a combination of bullish macro and crypto factors. On the macro front, CPI and PPI figures for September will be published on Thursday and Friday, respectively. With a bit of luck these prints will come in lower than expected, setting the stage for further rate cuts. Thankfully the implications of this inflation data will be much clearer than the employment data.

On the crypto front, there will be another major conference in the US later this week, specifically from October 9th to 11th. This is Blockwork’s Permissionless conference, which should provide a bullish tailwind for altcoins. You may have noticed that some altcoins were surprisingly resilient last week. From our perspective, it’s possible that this was due to Messari’s Mainnet conference, whose announcements seem to have flown mostly under the radar.

On that note, there’s another bullish crypto factor that seems to have slipped through the cracks, and that’s the news that Gurbir Grewal, the head of the SEC’s enforcement division, will be leaving the agency on October 11th. For those unfamiliar, Gurbir was the one who had been signing off on all the crypto crackdowns that have taken place over the last three plus years. Even though these crackdowns were likely done at Gary’s direction, it is still a welcome change.

This just leaves crypto’s historical returns. To quickly recap, September is a historically bearish month for BTC, whereas October is a historically bullish month. In our newsletter at the start of September, we noted that everyone’s bearish expectations could lay the ground for a surprise rally in September. This begs the question of whether we’ll see the opposite in October too - a surprise crash, like we saw last week.

The answer is complicated because it interacts with another widely-held view: Q4 is historically bullish for crypto. If the consensus that Q4 is bullish is stronger than the consensus October is bullish (which seems to be the case), then it’s possible that crypto rallies in October, and experiences the surprise crash sometime later in the quarter to upset the consensus around Q4. Uncertainty around the outcome of the November election is the most obvious catalyst for this in our view.

But, back to October. An October rally seems even more likely now that there have been billions of dollars of long liquidations and panic selling by short-term holders. This wipeout has set the stage for what could be an epic recovery, just because it could be a neck-breaking level of whiplash for those who got pushed out of the market. Don’t forget that it’s in the interest of the powers that be to pump the markets leading up to the election…

🐶 Memecoin Supercycle? 🐶

Are we in a memecoin supercycle?

The most common answer to this question on Crypto X (formerly Twitter) leans towards the affirmative.

After all, as Murad noted in his “autistically brilliant” presentation at TOKEN2049 recently, only 43 of the top 300 tokens by market cap have outperformed BTC year-to-date. Notably, 13 of the top 20 outperformers were memecoins. This is proof there has been a higher demand for memecoins over any other niche in crypto so far this cycle.

That said, a supercycle is usually defined as a ‘prolonged period of strong economic growth’ for any asset or industry. There are two components in this definition – ‘prolonged period’ and ‘strong economic growth.’

While Murad’s data makes the case for the ‘strong economic growth’ of memecoins, the ‘prolonged period’ of the definition can only be proved over time. In other words, it refers to the ‘persistence’ of demand for memecoins and not necessarily ‘performance.’ It’s the idea that ‘memecoins’ as a category within crypto turns into a full-blown industry with its own market participants and liquidity.

For what it’s worth, many have come up with compelling arguments for why memecoins will see this prolonged growth. And, depending on who you ask, the main argument behind their memecoin supercycle thesis tends to differ.

In Murad’s case, he claims the memecoin supercycle is fuelled by reasons both internal and external to crypto.

The internal reasons he cites are all related to the ‘low float high FDV’ meta we’ve been seeing recently. He believes there is an overproduction of crypto tokens with insiders artificially inflating valuations to fool retail investors into becoming their exit liquidity. He claims that memecoins are the only asset class that offers retail investors a real shot at becoming rich, due to their lack of supply overhangs and the presence of organic price discovery right from the start.

He also believes the crypto industry is “speculation first and technology second.” He highlights that most of the crypto projects which have the highest product market fit in the industry have a use case that is directly related or correlated to speculation. Examples cited include DEXs, prediction markets and token launchpads.

As for the external reasons, he points to rising economic inflation, the AI-replacing-jobs threat, loneliness, and the diminishing influence of religion on society as the main reasons for the popularity of memecoins over the long run. Specifically, he claims the diminishing mental state of society as a result of these factors will push people towards finding online communities for a sense of belonging. He claims the cult-like attraction of memecoins offers society this missing sense of belonging, especially in a world where everyone spends more time with people online than IRL.

If you ask us, there could be some truth to his external reasons. The main arguments of the memecoin/crypto supercycle thesis of other researchers also involve a few of the external reasons cited by Murad.

For instance, Lawrence from the Spartan Group recently published an article expounding how modern subcultures and digital movements, like crypto communities, mimic traditional religious structures.

Specifically, he noted how certain cryptocurrencies (eg BTC and ETH), in a similar way to religious figures, are treated almost as sacred entities, with “believers" (Bitcoin and Ethereum maxis) upholding their values through practices such as HODLing and spreading the narrative of decentralisation. 

He also noted that these groups, similar to religious sects, foster a sense of belonging, purpose, and a clear mission, with influential figures within the community often resembling prophets or leaders guiding their followers. This has been especially true for the memecoin space - we’ve already seen this happen with Elon Musk with DOGE and more recently with Iggy Azalea and MOTHER.

While Lawrence does not believe memecoins offer long-lasting communities, the persistence of DOGE within the top 20 coins by market cap (even in the bear market) is proof that the Lindy effect applies to memecoin communities as well. Some of these meme communities have gone on to create their own utility products. This is partly why we saw big-money players like DWF Ventures and Big Brain Holdings invest in memecoin projects like Shiba Inu.

Speaking of big money players, it’s worth mentioning here that we saw some of them ‘launch’ a memecoin project last week. We are, of course, talking about the 3AC memecoin launched by the infamous Three Arrows Capital founders. True to their reputation, the memecoin launched by them is full of red flags. One CT researcher published an X article detailing how over 80% of 3AC’s supply was held by insiders. Steer clear, folks!

Anyhow, another major argument behind the memecoin supercycle thesis is that it’s a natural extension of the ‘attention economy.’ Variant Fund recently published an article highlighting how ‘attention’ is one of the most important commodities in an increasingly digital world. It explores how crypto is reshaping the attention economy by allowing participants to speculate on the flow of attention through tokenised representations in the form of NFTs, memecoins, and tokens.

It argues that when users invest in memecoins, they are implicitly making a statement that they believe a particular meme/culture will grow in popularity. In the words of one X user, memecoins are “a way to angel invest in culture.” We’ve seen examples of this with the recent popularity of MOODENG, the memecoin based on a cute pygmy hippo that went viral on social media platforms.

Irrespective of which one turns out to be the primary driver, it’s become clear that memecoins have become an integral part of crypto and modern culture. Platforms like Pump.fun, which offer easy access to memecoins, have been incredibly popular and profitable this cycle. We’ll likely continue to see more platforms like it succeed as we get deeper into bull market territory.

Don’t fade the memes anon. We’re not telling you to blind YOLO, but if you aren’t thinking critically about them, you’re not doing crypto right this cycle.

🚨 Coin Bureau Trading is Back! 🚨

We have some exciting news to share!! - Coin Bureau Trading is relaunching, bigger and better than ever!

We’ve put together a team of the top trading educators to bring you the trading insights you need. That includes videos on everything from technical analysis, market commentary and even trading bot setup guides.

Meet the members of the Coin Bureau Trading Dream Team:

* Dan Krupka - Head of Coin Bureau Research
* Mariano - Founder of The Trading Parrot Youtube channel
* Aaron - Founder of the Moonin Papa trading channel

New trading vids are set to be launched in the next couple of days. So be sure to subscribe to the Coin Bureau Trading channel and let us know what you think of the content.

Our trading team is also looking to participate in Bybit’s WSOT! So, if you want to join the Team then just sign up to Bybit here!

🔮 Video Pipeline 🔮

* Sei Update: What you need to know!
* Silvergate Report: Inside the murky world of crypto banking
* Are Memecoins Dead? What the data seems to indicate…
* Quantum Computing Report: How this tech will shake things up!
* Blackrock’s Bitcoin Report: What are they plotting?
 
🏆 What's New at CoinBureau.com This Week? 🏆

* Top NEAR Projects: 8 DApps Leading the NEAR Ecosystem
* MetaMask vs Coinbase Wallet: Comparing Features and Security
* SafePal Bank Account Review: Features And Fees
* What is the Bitcoin Rainbow Chart? A Complete Guide
* Axie Infinity Review: Exploring Economy and Token System

📖 Quote of the Week 📖

Sometimes, making money in crypto requires you to put aside preconceived models and biases.

“The aim is to make money, not be right” - Ned Davis

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.