This is the strategy of cornering the market and according to wikipedia [1] "very few attempts to corner the market have ever succeeded; instead, most of these attempted corners have tended to break themselves spontaneously"
In fact, I think such attack would only create a short term volatility spike but make bitcoin market sturdier in a long term.
In first phase of the attack you would pour in huge amounts of liquidity which would attract more people to bitcoin market.
In the selling phase of the attack you would cause a temporary market panic but only for as long as you sell. And if bitcoin market players managed to find out about what you are doing, they would profit from it.
Finally, when you are out of money, the market would return to its normal course.
In fact, I think such attack would only create a short term volatility spike but make bitcoin market sturdier in a long term.
In first phase of the attack you would pour in huge amounts of liquidity which would attract more people to bitcoin market.
In the selling phase of the attack you would cause a temporary market panic but only for as long as you sell. And if bitcoin market players managed to find out about what you are doing, they would profit from it.
Finally, when you are out of money, the market would return to its normal course.
[1] http://en.wikipedia.org/wiki/Cornering_the_market