Ever since cryptos started captivating people in tech, the rumours that North Korea has been stealing coins from wallets and exchanges have never ceased.

Stories about North Korea’s crypto hackers often appear in headlines, especially when many of the world’s largest exchanges are based in Japan or South Korea.

Now the relations between the Koreas are warming up, and Kim Jong Un is viewed as ‘cute’ by many South Koreans, should you be less worried?

Well, there are bigger forces in the market, which is now like the new world when it was first discovered. And depending on how you play (or dance) with these forces, you are either the indigenous empires/tribes, or part of the jittered public from the old continent who eagerly want to be part of the great adventure.

Either way, you are playing with waves that might or might not swing in your favour.

Chinese chives

Some of you who know Chinese might have heard the idioms “cutting the chives”. Recently a few (non-Chinese speaking) friends asked us “what does this mean?”

What is special about Chinese chives? They grow incessantly as long as you do not dig out the root or kill the sheep. Farmers profit from cutting the chives periodically- they will grow back.

Chives need to be cut periodically

In Chinese cyberspace, cutting the chives is used to describe how big sharks manipulate the market. When prices are low, they long the asset, creating a price momentum; chives, as what retail investors are called, see the price surge and will decide to join the rally sooner or later.

Once time is right, the makers will sell their holdings, causing the prices to plummet and profiting from it. Chives, or retail investors, panic and sell their holdings at much lower prices – allowing makers to buy at low prices and prepare for the next round.

So it goes.

You are already familiar with it

The concept is obviously not new, as perpetrators have been using this to dupe retail investors and fund houses for decades, if not centuries, in the stock market.

Yes, you already know it: “pump and dump”.

Only that in the crypto world, makers can do it repeatedly without being punished by any regulators.

Brave new world

As we mentioned in the latest installment of our crypto review series, regulators are tightening things up.

Although, makers can move into more friendlier jurisdictions and by the time these smaller countries are coerced by big countries to adopt the same standard, market manipulators would already become very, very rich.

They will then have the (huge) financial power to build legitimate businesses instead, crushing their competition instead of cutting more chives along the way.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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