Last year, the ethereum network was clogged to a halt after FCOIN Exchange, a Singapore based exchange backed by the former CTO of HuobI, Zhang Jian, began its voting process for its new series of “GPM Tokens.” Many seemed surprised that exchange in its infancy could have such a drastic effect on the network, and was even further surprised by the exchanges acclaimed 7 billion usd in daily volume. However, both the volume and the voting process were heavily manipulated to the benefit of the exchange.
The current market seems to be largely driven not by organic buying and selling, but by exchange driven manipulation of the spot market to exploit the current dynamics of leverage trading. Since the exchanges know the characteristics of the outstanding shorts/longs, and since volume is low after these pumps or dumps leading to sideways drift, they can essentially engineer movements in price that create income in terms of liquidations. When there are lots of overleveraged shorts, an exchange can pump the price with bots briefly and collect the short position. Same with longs but in reverse, a quick burst of selling pressure.