Can the shrinking rise continue? What tricks are the main players playing?

A shrinking rise in crypto signals weakening momentum, often hinting at manipulation or an impending correction.

Jun 14, 2025 at 09:14 pm

Understanding the Shrinking Rise in Cryptocurrency

In the cryptocurrency market, a shrinking rise refers to a situation where the price of a digital asset increases but with progressively decreasing volume and momentum. This phenomenon often raises questions about whether the upward trend is sustainable or merely a manipulation tactic by market players.

A shrinking rise typically occurs after a strong rally, followed by weaker gains despite continued positive sentiment. Traders and analysts observe that while prices climb, trading volumes decline, indicating a lack of genuine interest from institutional investors or retail traders. In such scenarios, it becomes crucial to analyze the underlying factors driving this behavior and identify potential strategies employed by major players in the ecosystem.

Shrinking rise patterns are often seen as warning signals before a significant correction.

How Main Players Manipulate Market Sentiment

Market manipulation is not uncommon in the crypto space, especially during volatile periods. The main players — including whales, large exchanges, and institutional investors — often deploy sophisticated tactics to influence price action and liquidity.

One common strategy involves wash trading, where entities trade assets between accounts they control to create artificial volume. This gives the illusion of high activity and attracts uninformed traders into the market. Another method includes spoofing, where massive buy or sell orders are placed and canceled before execution, misleading other participants about real demand levels.

These manipulative practices distort market signals and can mislead novice investors.

• Wash trading inflates trading volume without actual change in ownership.
• Spoofing creates false order book depth to manipulate trader psychology.
• Pump and dump schemes are orchestrated by coordinated groups to inflate prices artificially.

Technical Indicators That Signal a Shrinking Rise

To detect a shrinking rise early, traders rely on technical indicators that highlight divergences between price movement and volume or momentum.

The Relative Strength Index (RSI) is commonly used to spot overbought conditions coupled with weakening momentum. A rising price accompanied by a declining RSI may suggest a loss of bullish energy. Similarly, the Moving Average Convergence Divergence (MACD) can reveal bearish divergence when the histogram contracts even as prices rise.

Volume-based tools like the On-Balance Volume (OBV) also play a role in identifying weak rallies. If OBV fails to confirm new highs alongside price, it indicates a lack of conviction among buyers.

Traders should monitor divergences in RSI, MACD, and OBV to assess the strength behind a rally.

Behavioral Patterns of Whales During a Shrinking Rise

Whales — large holders of cryptocurrencies — often take advantage of market euphoria to offload their holdings gradually. During a shrinking rise, these actors might engage in layering or painting the tape, where they place small orders at various price levels to guide retail traders toward specific entry points.

They also tend to move funds across wallets to obscure their activities, sometimes using decentralized exchanges to avoid detection. By distributing tokens slowly, whales ensure minimal price impact while maximizing profits.

Whales exploit shrinking rises to quietly exit positions without triggering panic selling.

• Using multiple wallets to hide accumulation or distribution phases.
• Executing trades through decentralized platforms to avoid centralized exchange scrutiny.
• Creating fake support or resistance zones through strategic order placement.

Impact of Exchange Behavior on Price Volatility

Cryptocurrency exchanges wield considerable influence over price dynamics, especially during a shrinking rise. Some exchanges may delay withdrawals or halt trading pairs temporarily to control liquidity. Others might list or delist tokens based on undisclosed agreements, causing sudden price swings.

Exchange-controlled market makers often step in to provide liquidity during low-volume periods, which can mask the true state of the market. Additionally, some exchanges allow certain users preferential access to data or execution speeds, giving them an unfair advantage over regular traders.

Exchanges can either stabilize or destabilize markets depending on their operational policies.

• Liquidity provisioning by exchange-affiliated market makers.
• Unannounced listing or delisting of trading pairs.
• Differential treatment of high-frequency traders versus retail investors.

Frequently Asked Questions

Q1: How can I differentiate between a genuine rally and a shrinking rise?

A shrinking rise is characterized by increasing prices with decreasing volume and weakening momentum indicators. Genuine rallies usually see sustained volume and stronger confirmation from technical indicators like RSI and MACD.

Q2: Can regulatory actions prevent manipulation during a shrinking rise?

While regulations aim to curb manipulation, enforcement remains challenging due to the pseudonymous and decentralized nature of many crypto transactions. However, stricter reporting requirements and audits can reduce spoofing and wash trading.

Q3: What tools can help me track whale activities during a shrinking rise?

Blockchain explorers and analytics platforms like Etherscan, Glassnode, and Whale Alert offer insights into large transactions, wallet movements, and on-chain behaviors that may signal accumulation or distribution.

Q4: Should I hold or sell during a shrinking rise?

This depends on your risk tolerance and investment strategy. Monitoring volume, order flow, and on-chain metrics can help determine whether the rally has real support or is being propped up artificially.