1. Usually, it will involve a pumping phase where they strategically buy in to deceive others of a increase in demand and interest...

2. This will result in the sellers becoming greedy- increase their sell price, and the buyers wanting to jump onto the train- willing to pay more.

3. The price increase will then continue even when the pumping action stopped.

4. When the price is right, they offload their holdings resulting in the dumping phase.

The only case I know is the Willy Bot pump, and even that I have my doubts, check it out:

https://willyreport.wordpress.com/2014/05/25/the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin/

Other situations, like you said, people will end up losing money.

Manipulation needs lot of money in both bitcoin and in fiat and creating a big sell wall to force price go down and buy whatever you can when price is like 5-10% than the point you have created sell wall. And removing that big sell wall and giving market some space to again get pumped and selling again what you bought at higher price.

back in 2012 when prices were low it was actually a fun game to do.

back then it was done simply by creating "walls"
in short if you dont want the price to go down by 5 you would create a resistance wall that causes
it to cost more for sellers to drop the price
for instance if the price was X you would put buys at X-5

ill make it easy to understand. first an image to go with the explanation


A: imagine the price is just about $665 and you dont want to going to $659
you can see that it only takes about 80 bitcoins to eat up all them orders.

B: so you put in an order(eg: 30btc) far enough to not get hit soon but close enough for people to notice now that it takes 110btc to eat all them orders

C: other people react. they see that theres now a larger then normal wall at $660 so theres no point in them adding an order below that as they dont have time to wait, thinking lower orders wont happen.. they become convinced the price will hold at that amount or higher
so some people add orders to $660 to reinforce the wall. and others put orders infront because they want their orders hit and satisfied the price wont drop further
this results in it taking 140btc to eat all of them orders

D: more people do the same adding more orders. now it going to take 200 btc to eat them orders (150btc before your order is touched) and those two orders after you have least chance of getting hit out of the orders in your price point

E: now here is the smart thing. knowing that orders are processed based on which ones at a price point was listed first, gets processed first. if you cancel your 30btc order at $660, the orders after you become next in line and then you can reapply your order again (in just milliseconds) to make you last in the queue. thus reducing your chances of your order being hit. so even without anyone else adding new orders the total coins are still 200btc on the order books, by just cancelling and reapplying your order. you move behind the two other orders, meaning they now get hit first should the price get that low.
now its still 200btc orderbook but now taking 170btc before your order is hit. most people dont know that if you dont want your order actually being hit you make sure your order is the most recently applied..
this can be monitored by simply seeing your price point volume increasing which obviously means more people are adding ontop of yours. so cancel and reapply to remain last in line.

many people dont realise it so they still see the order volume totals. and dont realise who is first or last. nor do they care
basically using something like 30btc can change other peoples trading patterns to make them have 170bt instead of 80 even before your order gets touched, all because of knowledge of how traders psychology works

I have done this before with a few thousand dollars on one of the alt exchanges, though the big manipulators probably don't do it this way.

I would put in a few small buy orders in order to get about half of what I wanted to buy. Over time so the price did not rise too quickly.

Let's assume I accumulate 200 ALTC (AltCoin) at the average price of $5 and want to buy another $1,000 worth.

Then I would put in a large sell order, like 100 ALTC at $5 (assume the current sell price is $4.95). Anyone who is looking to sell ALTC sees that there is a "big" sell wall so they put their sell orders below mine so they can sell. They may put their sell order at a lower price like $4.90, then others start to put their sell orders below that until the sell price is at $4.80. I then stick a 50 ALTC sell wall at $4.85. More people put the price lower so that they can sell, the price gets down to $4.75. I put another 50 ALTC sell wall at $4.80. More coins are put at lower prices and during that time I pull the original 100 ALTC wall and move it down to $4.60 (always keeping out of selling range because I do not actually want to sell).

Eventually I put a huge sell wall of 200 ALTC at $4.55 and watch as people selling drop their price to $4.50. At this point I start buying about half of the available coins at $4.50. Just enough to slowly accumulate coins and use my $1,000 to buy cheap coins. If all goes well, I can get 222 coins with that $1,000 instead of my original 200. I then buy up the last of the coins below my wall and then pull the wall allowing a rush of buys to drive the price back up to the $5 price, maybe even with a rally driving the price higher (which I can then take advantage of and sell to get back to my starting point).

Same can be done in the opposite direction, pumping up the price before letting it drop. Also known as the pump and dump.

You can tell that this happens on the larger scale when a huge 1000 bitcoin wall goes up, then when someone tries to buy into it the wall disappears (they don't actually want to sell).


Edit: Like franky said.

it doesnt take as much as you may think.. you are also playing other peoples greed. making them order "with you" thus due to them seeing there is some resistance.

secondly most exchanges just place orders. knowing they never have to pay themselves out. they literally "create" orders backed by nothing. which is happening more recently. but even still just one wall creates everyone else to move their orders up this reinforcing the wall even further

On large scale only those people can manipulate the price of bitcoin who have big piles of bitcoin, while on small echanges i am seeing that people with a little amount can also manipulate the price, i also have sold some bits at the price of $590 when the normal price was around $550.

lol karpeles whale was the first "known" incidence of the "fake"(not backed) order whaling

I don't think an individual trader has the power to manipulate bitcoin price in any way. Because it is very rare to have such a huge amount in hand of an individual trader.

Another way to manipulate bitcoin price is to do negative publicity. But it is again almost impossible for an individual. Only an elite group of trader and miners can do it.