Hello everyone, I am Zhe Ge. This morning I saw many friends on Binance Square and Twitter regretting that they sold MMT too early. Many people lamented missing out on the market for MMT that night. Little do they know, this was a meticulously designed slaughter. Here’s how it unfolded.
There is nothing new in the financial markets, but the methods of harvesting are always innovating.
At three in the morning, when most investors were already fast asleep, a carefully planned 'raid' quietly took place in the cryptocurrency market. The price of the MMT token suddenly surged, exceeding a 100% increase in just half an hour. The battle officially began at midnight and reached its peak by four in the morning, with the coin price rising from 0.8 to a high of 4.47.
However, this is not a celebration for retail investors, but a precise hunt targeting short sellers. Market makers completed an almost perfect harvest through a series of complex operations.
Prologue: Pre-Market Layout and Expectation Creation
It all began during the pre-market trading phase on the Bybit platform. MMT opened at a high price, then fell all the way down, finally stopping around $0.6. At that time, market sentiment was generally pessimistic, as new coins often broke below their opening price, leading many investors to naturally form short-selling mindsets.
In the past week, a pessimistic atmosphere has pervaded the market, with BTC dropping from 115,000 to the 100,000 mark. During this downward process, the sound of bears coming started to spread in the community, and market sentiment was in the fear range.
This mentality is precisely the first step of the trap carefully designed by market makers. By creating a trend of high opening and low closing, market makers successfully conveyed pessimistic expectations to the market, laying the groundwork for subsequent operations.
Raid: Accurate Price Smash and Psychological Breakdown
Just the night before the token was officially listed for trading, market makers initiated their first raid: they suddenly smashed the price down to $0.35, which happened to be the cost line for most retail investors. The buying price for the MMT new listing on the hottest platform Buidlpad was $0.35. This is a heartless operation.
The choice of this price point is by no means accidental. Breaking through the cost line can maximize retail investors' psychological panic, prompting them to either panic sell or open short positions to avoid risk. This operation exploits the most basic risk-averse instincts of investors, turning them into a tool for harvesting.
To verify this inference, I found some data on Twitter, let's calculate the data for MMT: the community accounts for 9.91%, Binance Alpha 1.5%, Binance spot is 0.75%, other CEXs account for an additional 2.5%. Buidlpad belongs to Public Sale and is not counted in the community, so the token proportion is 5.16%. Looking at the airdrop tokens: the top 20 addresses received over 300,000 MMT, and over 700 addresses received more than 7,000 MMT. Of course, the withdrawal from Buidlpad was not smooth, and many people opened short positions for hedging, indirectly providing market makers with a godsend.
Climax: Low Opening Creates Panic and Big Players Enter the Market
On the morning of the trading day, MMT opened low at $0.35. More importantly, the rule that airdropped tokens can only be unlocked three days later forced many large holders who received airdrops to hedge — that is, to open short positions to mitigate holding risks.
In the following half hour, MMT fluctuated violently between $0.3 and $0.4, successfully accumulating up to $100 million in open contracts on both Binance and Bybit exchanges. Assuming half of this came from the market makers themselves, they established a position worth $25 million with less than $10 million in cost.
At this moment, market makers demonstrated absolute control over the market. Their position in the contract market had already exceeded the actual circulation of the token, meaning they effectively controlled more than 100% of the circulating tokens.
Harvest: Midnight Raid and Full-Position Trap
Market makers chose to start pushing the price up at four in the morning, a time that was definitely not arbitrary. On the one hand, the fee had just been refreshed; on the other hand, this is when Asian investors are in their deepest sleep.
The most ingenious part is the use of investors' position patterns. If most shorts use a single-position model, then doubling the price is enough to trigger large-scale liquidations. However, it was observed that the doubling of the price did not lead to a significant reduction in open contracts, indicating that a large number of short sellers used a full-position model.
In a full-position model, all positions share margin. Once the price moves in an unfavorable direction, not only does a single position face liquidation, but it may also involve all other positions in the account. This provides market makers with more harvesting opportunities, allowing them to gain excess liquidation profits from limited upward price movements.
Revealing: The Perfect Trap of Market Makers
The core logic of this operation lies in: manipulating contract market prices by controlling the spot market, using leverage to amplify gains. Market makers first controlled a large number of circulating tokens, then created panic by crashing the price, inducing the market to form a short expectation.
When a large number of investors enter the market to short, they trigger a short squeeze by pushing the price up. Each time a short position is liquidated, market makers can close the corresponding long position to realize profits. The whole process is like a meticulously choreographed drama, with each step precisely calculated.
Warning: How Retail Investors Can Avoid Becoming the Next Batch of Harvested
This midnight horror of MMT has sounded the alarm for all investors:
Beware of highly controlled small-cap tokens. When the circulation of a token is highly concentrated, the price is no longer a reflection of market consensus but a tool manipulated by a few.
Understand the real risks of derivatives trading. In a highly controlled environment, hedging may also face significant risks. Once the price is manipulated, traditional risk management tools may fail.
Avoid heavy positions in a full-position model. Although a full-position model can provide higher capital efficiency, it may also carry the risk of 'total loss'.
Maintain a clear understanding of market structure. In the cryptocurrency market, which has not yet been fully regulated, the experiences of traditional financial markets do not always apply. Especially for those altcoins with a small circulation, they are basically controlled by the market makers, using contracts to harvest retail investors.
Information asymmetry always exists in financial markets, but in the emerging field of cryptocurrency, this asymmetry has been magnified to the extreme. For ordinary investors, recognizing their informational disadvantage and adopting corresponding risk management strategies may be the first step to avoid becoming 'the harvested'.
In this market, sometimes the biggest risk is not that you missed an opportunity, but that you fell into a carefully designed trap.
