How to Manipulate the DEC Market 101

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A few days ago I posted about a large sell order of 2.1 million dec sitting on the market.

At the time I thought it was just someone selling their DEC in a kind of clumsy manner.

However, the 2.1 million is still sitting there and there are some telltale signs that this order is not intended to be filled but instead meant to drive down the price.

Let's talk about it.

Screen Shot 2021-09-11 at 1.07.57 AM.png

This is a screen shot from just a few minutes ago. You can see the order in question underlined in red. I want you to notice the position of the order. It's not pushed to the front but hanging back a few spots.

Now let's look at the screen shot I posted 3 days ago when I first saw it.

Screen Shot 2021-09-08 at 12.30.41 AM.png

Notice the position? Not up front but hanging back a few spots.

Why is that important and how is this manipulation.

So an important thing to note that is not displayed in this picture is that this order pops in and out constantly and it never goes to the front of the line. When it pops up there is always a very specific placement. Somewhere between 3 and 6 positions from the front and always just barely out pricing some medium-large orders.

Here's the game. I want to push the price down. Maybe its to buy more and maybe its to get more dec per dollar when you want to sell some cards which you can push back up later. But for whatever reason, I'm a whale and I want to push DEC down.

What do I do?

Well, I take all my dec and I put a roadblock right in the middle of the sell orders. I don't actually want to sell, I just want to push the price down so I don't dare put my order in too close to the best price.

What I do instead if I slightly out-price a few bigger orders who are close to the best price but not too close. I just want them to see a giant whale undercutting them and have them realize they are never going to get to sell theirs so they need to undercut me.

Now, I'm just going to wait until a few bigger orders see that they won't get a sale until I sell all 2.1 million dec and decide they have to lower their prices to get in front of me and once that happens, I pull my order happy that I drove prices lower without ever selling anything.

Now the thing about this technique is it's one that only really works in illiquid markets and against new traders. And this is the perfect place for that. More on this later.

Oh, as I write this, the order is now gone again.

Screen Shot 2021-09-11 at 1.28.37 AM.png

Continuing on...

Let me ask you this: If you were trying for days to sell your massive 2.1 million dec order so aggressively that you were posting the whole order at once causing a huge price shelf so big that everyone paying attention will undercut you and you;ll never be the best price, would you keep removing it every few minutes and never let it get to be the best price?

Probably not because it would never sell.

But the point isn't to sell it, in fact I first noticed this three days ago and you can see that not only has this order not gotten any smaller since it hasn't sold anything but its actually gotten bigger. Which means every time this person gets more dec they just add it to the order to make it even bigger.

What really tipped me off to this is that I'm trying to sell about 80k dec. I've changed the price 3 times and 2 of them, within a couple minutes of posting my 80k sell order this order has just popped up suddenly out-pricing me by the smallest possible amount. This doesn't happen when I price it at the best price. So I have no choice but to drop below and then it disappears.

In regulated markets, this is illegal. It's a form of "spoofing". It's using real orders you never intend to fill but changes the perception and structure of the market so you can get better prices. This is what JP Morgan traders have been charged with to manipulate the price of precious metals.

It's a bit of a different technique when they do it but in slower and less liquid markets this is an easy way to take a few thousand dollars and push a multimillion dollar market around however you want to. This can be used to push the market price up also and being that they have a huge holding, they probably will do that after they've accomplished whatever it is they are trying to do right now.

Since you've read this far it seems you might be interested in how markets work so here's a quick lesson that could make you a better trader and will also highlight another way this whale is manipulating these markets.

New traders get hurt by all the time by misreading this chart and I hate it.

It's the depth chart.

If you trade crypto or on Robinhood, these depth charts are often front and center. I've never been quite sure why since it's usually not as accessible on traditional platforms and most people use them wrong and lose money.

Oh, I just went to screen shot the depth chart and look who's back, three from the top trying to goad those higher 7 prices to come down.

Screen Shot 2021-09-11 at 2.17.00 AM.png

Anyway, this next thing is the depth chart. If you've never seen one of these it's just a visual representation of how much inventory would need to be bought or sold before the market would reach that price.

You can see here what a 2.1 million dec order looks like on the big scary red side that dwarfs the visible buy side. If you took that one order out, it wouldn't look nearly as big and red and mean.

Screen Shot 2021-09-11 at 2.17.51 AM.png

So as you can see, the intuitive way to look at this chart is to say, there's a wall of sellers and since more selling than buying leads to lower prices, a buyer would probably intuitively avoid buying here figuring it's probably going lower. I mean there are so few buyer shown here and it would take a miracle to overcome that mountain of sellers right?

Well yes. But not usually.

In more liquid markets, something very counterintuitive happens. Market participants usually heads toward liquidity and inventory. SO if there's a mountain of people waiting to sell at these prices, markets will start buying from them because whales can move a lot of capital without sending prices up. If this chart was reversed and there was a huge amount of buy orders and very little available to sell, any order of size that was put in would move price too much. Funds and whales buy into that resistance and sell into support because they have a lot of capital to move.

Most people get this wrong. They see a chart like this and they bet against it. As they are betting against it though, whales start taking bites out of it and creating a sizable position. Price doesn't move much but volume start spiking which alerts smaller traders who jump in but by that point the mountain is gone and those small traders start to push the price up. The people who have the buy order in see price moving with out them and they either FOMO in with market orders or they keep pushing their buy orders up in price.

Once the buyers run out and there's a whole bunch of people with buy orders in to buy that dip, this chart is reversed, newbies see it and decide its definitely going up and between that and the now huge green mountain of dip buyers, the whale has the support to sell without pushing price back down. The air comes out of the trade as they sell their final shares and the whole thing collapses while the new trader who just got in can't believe that every single time he/she buys something it does the opposite thing!

However, in the case of the DEC market, it's not that liquid. This whole mountain of red is probably only about $40k worth of inventory and most of the traders in here aren't even traders but people buying and selling assets for a game. No one needs huge liquidity to get in or out so these are more likely to play out the way people intuitively think they will. So when you post a sell order for 2.1 million dec and people see this chart, it makes them want to sell and pushes prices down more.

And this is DEC market manipulation 101.



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7 comments
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I personally don't think anyone should be charged for this, that's in response to how you related this to Jp Morgan traders.

This is a free market, it's not to be compared to a centralized one. Though the demerits are clear, it's rather is a technic to acquire bigger stakes or claim larger positions.

This is what differentiates the cryptocurrency market from the rest, I'd say I prefer the Hive Engine structure to public markets like Binance. On Hive engine you can choose whatever price you want but on markets like Binance, there's a limit one can set on spot trade, that sucks, doesn't really define a free market.

I see nothing wrong with a regular guy tryna outplay the rest.


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I think you're misusing free market here. The free market theory when broken down to its most pure form is natural supply and demand come together in a voluntary and transparent and non-manipulated way which ultimately leads to the most efficient use of resources. The merits of the system is that the most efficient use of resources tends to enrich/create a higher quality of life for the most people possible.

That last part is very important because it is why people have been so passionate about the idea for hundreds of years and fought and died for the ability to practice it.

A free market is not using market mechanics and psychological tactics(techniques) and coercion to make other market participants work against their own interests and in a way that doesn't at all take natural supply and demand or efficient distribution of resources into account so one person gets enriched at the expense of everyone else.

Also, isn't putting in a limit order on binance putting in whatever price you want? Am I misunderstanding what you're saying in this part?

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Well, I checked who is doing this. It is @jumpjet. This account probably belongs to @hesoyam and that probably belongs to @sanandre.

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(Edited)

I don't know him but one of those accounts has a post linking those and a few other accounts together and mentions that while you probably don't know him, he has a bunch of bots int eh market so you may have traded with him.

I'm very curious how you looked that up though? I know the information is out there but I never know how to find it.

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interesting. i thought it was going down only because the whole crypto market was on a downtrend. should manipulation be allowed? isn't it being done in the card markets too?

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I don't think there is a way to stop the manipulation other than calling it out. After this post went up, the listing stopped moving around the next day and then disappeared. Since then the price has more or less stabilized, albeit lower. It definitely started with the crypto market falling but was pushed down much harder by this and possibly other similar listings.

The card market is a different story. That is just a story of immense oversupply coming from absolutely everywhere. It just doesn't take nearly this many cards to run this game at current player counts. And that says something since we now have 235k daily active accounts and most of the cards in circulation were printed when that number was under 5k daily actives.

There was so much inventory that whale accounts were just sitting on. So many of them had 500+ copies of almost every card as well as several that were maxed out. There are also a bunch of cards that were in old abandoned accounts. During the initial frenzy of buying, most of that stayed dormant, but after splinterlands got more news and people realized they were sitting on cards that were now worth something, they came in to sell or rent their cards.

As the supply started hitting it was initially bought up but then it started coming in faster than it could be bought up. At the same time whales, who'd initially sat back to not smother the rental markets when they first opened with their mountains of supply started dropping their inventory on the rental markets after the last end of season rental bonanza (which btw doesn't seem to be happening this season as we are two days away and there's been very little ramp up so far) which meant suddenly those markets are drowning in supply too.

Rentals are stagnant because rewards are down (which is partially because DEC got knocked down meaning they started paying out less dec per win, people start playing 10 bot accounts so more games were being played which drained the pool more and the dec you did still win is worth less to boot. The reward cards ran out, and suddenly everyone had to spend 750 dec for quest potions which weren't paying out enough to cover the cost so renting players stopped renting and started just playing the daily quest) and this all means its suddenly far less lucrative to rent out cards as the amount of rentals are stagnant even as the number of (bot) players rise and there's multiples of inventory more than before. So people who were renting are now selling.

There's more oversupply coming in with the impending Chaos Legion drop which is going to saturate everything even more so some people are selling cards in anticipation of that supply lowering prices and others are selling to raise funds for buying CL packs while at the same time, buyers who were buying the dips keep seeing it dip below where they bought so they've stepped back.

So inventory is coming from absolutely everywhere and buyers have stepped back to reassess and so impatient sellers are undercutting each other trying to be the cheapest because nothing is selling and that has sent prices into a tailspin.

It doesn't help that when they released the stats for the newest reward cards, the devs basically showed that they believe they need to massively increase the card counts to deal with the growth so now everyone knows we are about to get buried by CL.

All I can say is I hope this land thing blows the roof off the joint and they can work out these rewards because they are teetering and it might just be happening at a time when the devs are feeling invincible.

We will see.

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I totally agree. All we can do right now is wait and see how things will pan out.

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