Ok.... lets break this down to simple practicality. If you are putting up your BTC for sale for USD 500. Then immediately a "bot" comes in and places a BTC for 499. . You then willingly place your next BTC for 498 and so on till its like 496 or something, am I right? So this is when I come in and go "hey look... cheap BTC... let me buy some" and purchase all the 5 or 6 BTC I see selling for less than 500. I don't see where your conspiracy theory of "short selling" and the "invisible hands of deep pockets" driving prices down happening.
It's happening in smaller crypto's more. In the BTC/USD market they don't have that much advantage (if any). That market is too active and more difficult for a bot.
But as mentioned, algorithmic trading has come a long way over the last 20 years. They know where the opportunities are, and trading BTC against the USD is unlikely to be one.
This strategy has been observed and written about. HFT firms in the stock market make the pretense they are adding liquidity, and most of the time their trading in larger stocks is marginal, but in less liquid stocks their tactics are more predatory
However as mentioned above also the time is probably happens with BTC is when some major negative news comes out. And that would mean it is not a level playing field..
One of the other problems is that if someone is short selling coins out of a hot wallet. then it means that potentially people will not be able to withdraw or sell their coins. Of course an exchange is unlikely to admit what has happened and will more than likely say they are doing an audit, or they are having technical problems and not to worry.