Most of us participate in this market as solo-players or small investors, participating with the goal of investing for profit, but since ancient times, our grandparents have a saying, "know yourself and know your enemy, and you will win every battle". The crypto game up to now has the participation of many different parties to Chia the profits from this lucrative cake.
The game is Capital unfair in terms of both assets and position, so our job as retailers is to understand who they are, what their gameplay and Vai are. That is the key to helping players come up with their own investment plans and strategies. So let's join Allinstation to learn about the players in the market and their Vai !
Why does the market need different players?
A market is created when there is both supply and demand, buyers and sellers, which makes an asset or object valuable. Tracing back to Bitcoin's history, BTC was born in 2008 with the purpose of becoming a means of payment that is not controlled by any entity as stated in Bitcoin 's whitepaper.
Bitcoin initially served its purpose as a means of payment for black markets, most notably Silk Road , an underground online marketplace that became widely known in the early 2010s, primarily for buying and selling illegal goods and services. Founded in 2011 by Ross Ulbricht under the alias “ Dread Pirate Roberts ,” Silk Road became the symbol of the Internet’s dark market .
There is also the event of a man using 10,000 Bitcoins in 2010 to exchange for 2 Pizzas , when now that amount of Bitcoin is worth about 600 million dollars. It is also because of this event that we now have Bitcoin Pizza Day .
It is also thanks to these first steps that Bitcoin gradually attracted many people and realized the potential of this currency. Many large organizations and entities have acquired Bitcoin to steer this asset to become one of the most valuable and attractive assets in human history. Attracting more players to the game will make the market more and more vibrant and liquidation, creating momentum for the price increase of this currency.
Who are the Players in the market?
In the cryptocurrency market, players are inherently unfair and are arranged in layers like a “food chain ”, where the game is mainly in the hands of the entities above.
The lowest level is probably small investors like us, when what we can do is read and absorb what is brought down from above, which are the projects and use our money to buy back the project's Token .
The next level is communities/Kols/media sites, these are small to medium sized organizations that indirectly cooperate with the upper level, which are projects, to convey information to us, small investors.
The upper layer is crypto projects who make the game more interesting by always adding spices such as projects and trends in the market.
The upper level is VCs, who have both money and relationships. The success of a project depends a lot on investment funds. In addition, there are Market Makers (MMs) and exchanges to drive the price of the project.
And at the top, the controllers and navigators of the game are government organizations, the FED, whose every decision affects the world economy in general and the small cryptocurrency market in particular.
What is the Vai of the Players in this market?
Government, FED, major financial institutions
These entities are a whole system of power, money and the ability to control the game. The influence here is probably global, the entire economy, not just the financial market and Crypto. Every decision they make can have an impact, whether directly or indirectly. These organizations will be the ones to make decisions to steer the market in the way that benefits them most cleverly.
Read more:
- What is the FED? How will FED decisions affect the Crypto market in 2024?
- What is SEC? Structure, operations and impact on the Crypto market
- What is CFTC? Structure and Impact on Crypto Market
Ventures Capital
These are the people who have “money” in this market, not only that, but also relationships. Their reputation + money + relationships are what any project needs, money to help crypto projects create products that attract users, reputation to help the project shine and become more prestigious in the eyes of users, relationships are so that the project can expand and develop to become stronger.
Of course, these investment funds also participate in making profits from trading and manipulating the Token price of the projects they invest in, thereby making a profit. However, due to the benefits gained from helping and investing early in the project, their advantage is much greater than other small investors and usually the loss rate of the funds is very low because they are a group of individuals who are excellent in the investment field, so all their deals have specific investment, manipulating and exit strategies.
Read more: Series of leading investment funds in the market
Market Maker (MM) and Exchange
Market Maker or liquidation creator, the main task of this entity as the name suggests is to "create liquidation" for the Token, when a Token is traded, there will be a price difference between the seller and the buyer, when person A places a bid at 0.01 and person B places a bid at 0.01.01, the price will have a spread (difference), at this time the Market Maker will do their job of filling such price gaps, and also thanks to filling thousands of price gaps during the Token trading period, the Market Maker will make a profit. Usually, Market Makers will be individual organizations or can be investment funds in Token, MMs will be cooperated by projects, VCs, ... to set prices, create liquidation for a certain Token .
Typically, Jump Crypto, Wintermute, DWF Labs are notorious Market Makers in the market, and each MM will have a different way of driving prices depending on their investment strategy and taste, you can XEM the picture below as an example of how these MMs drive the prices of coins, the future time may change depending on the MM's strategy when too many Retails catch on.
The exchange is another important player in crypto , as it is XEM a market where almost all components of the game are gathered, where Token are traded, each exchange will also have a different strategy to attract users, but the main purpose of the exchange is still to have a large number of users to collect a lot of transaction fees as well as a rich source of liquidation from its users, thereby attracting Token listed on the exchange.
The problem of the Exchange is XEM a chicken-egg problem when many users have more liquidation and more good Token listed, and vice versa, many good Token listed have more users joining. The Exchange can also be XEM a Market Maker entity when they can completely control and manipulate the trading price of a Token on their exchange. Normally, a project that wants to list on the exchange will need to pay a fee, or the project is backed by the exchange, or the project is so hot that the entire exchange wants to list the project to gain liquidation.
Cryptocurrency Projects
Although these are factors that contribute to the creation of the game for the market, making the market more attractive, without them the market would be extremely boring. However, placing them in the middle position is because the projects do not completely control the game, and the number of crypto projects is thousands of projects, without this project there will be another project, the projects are also XEM as tools for the above entities to make profits, but a project itself cannot shake or change the market situation.
The goal of crypto projects is to make money, and they will make money through Token Sale , mostly and partly from product revenue. To sell Token , they must create good products, have good stories and applications to "create trust" for small investors to buy their Token in the hope of increasing prices, and they do this through product strategies and the help of VCs. There will be good and bad projects, there will be projects that will help increase Token prices, giving small investors the opportunity to make a profit. However, there are also many projects that launch products, sell Token to investors, and then abandon both the Token and the project after creating something that gives investors confidence to give them money.
Communities/Kols/Media
Because a project needs more users to know, however, it will be difficult for normal users to access information on many projects at the same time, so there will be a need for communities to aggregate project information to provide users with less effort as well as help projects reach users more easily. A user can learn about and follow 2-3 projects, however, an organization, a Kols that is cooperated by projects can provide a user to learn about and follow 8-10 projects at the same time. From there, users will benefit from learning about more projects and vice versa, the project will also reach more users. Like an agent distributing information to retailers.
However, when communities cooperate with projects to provide information to users, they also need to be selective because sometimes there will be some communities that benefit from cooperating with the project to "put the potty" on their own users, typically individual Kols will often encounter this problem.
Retail investor
Investors participate in the market with the purpose of making profits from projects, but they will also unintentionally be liquidation for projects to Token Sale to, learning about the project to buy and sell at the right time to make profits and avoid being Dump is the task of small investors to preserve their own assets. Capital , the game of small investors is unfair because in addition to reading and understanding the "public" information of the project itself, sometimes that information is not true to what the project does, investors need to practice their sensitivity to judge what the project does.
