Some crypto analysts have taken to social media to examine the practices of centralized exchanges (CEXs), focusing specifically on MEXC and its alleged manipulation of the price of Kaspa ($KAS).
These analysts believe that CEXs contribute to artificial bearish sentiment and downward price movements, raising significant concerns for investors.
An analyst known as Cily on X singled out MEXC on X for allegedly neglecting to include Kaspa in its “hot research” despite a notable 33% price increase on November 10th.
This omission, especially in light of Kaspa’s stronger performance compared to other assets like SUI, is viewed as evidence of intentional bias or manipulation aimed at suppressing Kaspa’s visibility and price momentum.
Crypto proselyte also accused CEXs, particularly MEXC, for manipulating the price of Kaspa by leveraging large reserves of user-held assets for their own benefit.
This aligns with a growing narrative within the crypto community about the risks associated with keeping assets on CEXs, where users lose not only control of their funds but also influence over market dynamics.
Alleged Price Manipulation Tactics by CEXs
suggests that CEXs may utilize user deposits to engage in short selling. By dumping large quantities of Kaspa on the market, these exchanges can artificially drive down the asset’s price.
The resulting drop in value induces fear and triggers further sell-offs, enabling the exchange to buy back the asset at a lower price, profiting from the difference.
According to the post, CEXs often set up substantial sell walls, placing large limit orders on the order book.
This creates the illusion of overwhelming selling pressure, discouraging potential buyers. The perceived excess supply amplifies panic, causing the price to decline even further as traders rush to sell.
The analyst contends that CEXs may deliberately spread bearish news or work with influencers to heighten negative sentiment around a particular asset.
This manipulation aligns with their strategy to profit from a declining market, as increased fear and uncertainty can lead to further price drops.
During periods of high volatility, CEXs might temporarily disable withdrawals or halt trading. These actions exacerbate market panic, as traders are unable to respond swiftly.
The coordinated disruption can lead to sudden price drops, increasing selling pressure and further depressing the asset’s value.
The analyst accuses CEXs of engaging in wash trading, a tactic where the same entity rapidly buys and sells an asset to create a false impression of high trading volume.
This artificial activity generates a misleading sense of intense sell pressure, negatively affecting market sentiment and pushing prices lower.
Why CEXs Manipulate Prices
Pushing prices down allows CEXs and their affiliates to profit significantly from short selling. Lower prices enable CEXs or affiliated whales to accumulate more of the asset at a discount, positioning themselves for future gains.
Sudden price drops can trigger liquidations of over-leveraged positions, benefiting CEXs through fees and access to collateral.
Manipulating prices helps CEXs maintain control over market dynamics and trends.
Allegations exist that CEXs coordinate with large market makers or institutional investors to orchestrate market moves, further manipulating price dynamics.
