Abnormal increases in purchase orders can help to detect increase and fall schemes. The largest groups managed to generate volumes of USD 500,000 on average.

The groups of operators, who cause price increases and falls, cannot manipulate the value of Bitcoin (BTC) or that of other large cryptocurrencies. However, investors in small altcoins have a way to avoid such pitfalls, according to a new study.

A group of researchers from the Sapienza University of Rome wrote in May a document titled “Pump and Dumps in the Bitcoin Era: Real-Time Detection of Cryptocurrency Market Manipulations”. They say that it is essential to take advantage of the abnormal growth in purchase orders, which investors to buy extremely quickly, at any price.

The observation of these patterns, together with other information regarding volume and price, allows detecting when an increase and fall scheme in altcoins begins. According to the study, this algorithm does it a lot faster than any other solution currently available.

The report says that their real-time detector significantly surpasses the current state of the art, improving the expected detection speed in 30 or 25 seconds. It also highlights that exchanges can identify a pattern of increases and falls in altcoins better than any outside observer. Furthermore, the small forces of the law against increases and falls can dramatically reduce these market manipulations.

The researchers analyzed the period from July 2017 to January 2019. Of the eight groups of rises and falls that they identified, the largest were Big Pump Signal, Trading Crypto Guide, and Crypto Coin B, all of which focused on the great exchange Binance. The report indicates that these groups were all capable of generating an average volume of millions of US dollars. Big Pump Signals had the greatest impact with an average volume of over USD 7 million per operation.

Meanwhile, some small groups that operate Bittrex, Cryptopia, and YoBit generated average increment volumes ranging from a few hundred US dollars to nearly half a million USD dollars per increment.

Groups Operating Under Hierarchies

According to the study, a small group of leaders or “administrators” managed most of the groups that generate increases or decreases in altcoins. The said groups also had members organized in a hierarchy. Most times, the highest-ranking members were able to benefit from receiving notice of the next increase before the other members, possibly entering early while the price was still low.

According to the report, the advantage in terms of time of being at higher levels is usually 0.5 and 1 second concerning the next level, and the maximum advantage is in the interval between 3 and 8 seconds. It adds that the way to climb the hierarchy usually involves bringing new members into the groups.

However, it seems to be that these groups are now operating on a smaller scale. The aforementioned group, Big Pump Signals, now has fewer than 27,000 members. Its last publication, made on March 21st, stated that “the market was not ready for an increase.”

The current situation has changed this a lot since many people are watching the markets from home due to the COVID-19 pandemic. This means that boosting the market right now is good.

Therefore, small altcoin traders should be paying attention to “abnormal growth” in-market purchase orders. The researchers say that a much more careful investor would use limit purchase orders, to buy securities at no more than a specific price.

By Willmen Blanco


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