A cryptocurrency whose price suddenly jumps before falling: speculators, organized in groups, no longer hesitate to launch flash operations to artificially inflate the value of these highly volatile digital assets and quickly reap profits.
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In mid-May, an obscure cryptocurrency, the Enzyme, went from 30 to 74 dollars in a few minutes, with a very high volume of transactions. A few hours later, it plummeted and it is now only worth 27 dollars.
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.
To give more scale to their action on the Enzyme, they also used a general public social network, Twitter in this case, in order to encourage other people to invest as well.
“Whales (nickname for big investors, editor’s note) pick up 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 people to beware of “fake accounts” that sought to suddenly inflate its value.
But it was too late, and many investors had already gotten in on the perilous process of buying and then selling fast enough before the soufflé subsided and demand dried up.
Almost all of them 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.
‘No real demand’
“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 are above all a strong marketing savvy.
“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 crypto-assets, for example by taking up the theme of the failure of major economic institutions.
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.
“Suddenly all this unethical behavior becomes more justified” with these theories, notes Stuart Mills. Because the speculators say to themselves: I was fooled, so it is my turn to fool the others”.
The recent decline in demand for cryptocurrencies and the resulting decline in prices, however, make 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.
