Pump and Dump Cryptocurrencies: Explanation of the term and examples

In late 2021, the little-known Santa Floki (HOHOHO) coin skyrocketed in a matter of hours. Even though the coin is no longer listed today, at the time investors could earn 5000% profit. More than 1000% in 2 days could bring investors the Viking Swap coin. However, provided that it was bought no later than November 2 and sold the next day.

Such short-term price bursts, which have no logical fundamental explanation, are called "Pumps", the subsequent fall is called "Dumps". And the strategy itself is called Pump and Dump.

From this series of articles you will learn:

• What Pump and Dump is and whether this strategy can be called a scam.
• Signs of a Pump and its possible consequences for the investor.
• Is it possible to make money on cryptocurrency pumping. Tools for earning on Pump and Dump.
• How to avoid falling into a pump. What to do if you get caught in Pump and Dump.
• The review will be especially useful for those who are gambling, think about fast deposit acceleration and how to earn from surges without knowledge of technical analysis.
• What is Pump and Dump and how it works

What is a Pump. Pump and Dump is a manipulative scheme of artificially rocking the price with its subsequent collapse. As a rule, this scheme has an organizer who uses different instruments to attract private investors in order to vigorously increase bids for purchase. After the price rises, the organizer gets rid of the asset. The tools used include the media, messengers, social networks, mailings, viral advertising, etc.

Takeover

The Pump and Dump model looks as follows:

1 Organizers choose a platform and a coin on which to run a Pump. And they buy it up in small volumes, so as not to affect the price. Most often it is a little-known coin that has a stable horizontal price chart.

2 The organizers launch the first wave of the pump. Through the media and other sources of information, it is reported that the rate is about to rise. It seems to investors that they have unique information, therefore they will be able to earn. But in reality, they become victims.

3 The price begins to rise due to demand pressure. Other investors see the rise and also join the general movement. The price accelerates-the upward movement is called a "pump".

4 Organizers meet rising demand by dumping their assets. The growth stops, private investors also try to sell the asset, but there are far fewer buyers. The price goes down sharply - the downward movement is called a "dump".

5 The presence of the second wave depends on the organizers and the willingness of investors to invest in the asset again. Three waves are rare.

The scheme may be more simple, but its essence is the same: the media launches a news story, which instills confidence in growth in investors. A sharp increase in purchases raises the price, after which the dumping takes place.

Dumps can be short-term or long-term. Short-term ones last up to several hours and are of local nature - they are held on a separate platform and practically do not influence the general price formation. Long-term - last several days. It is possible situation of fast (a few hours) rise and step-by-step decrease - it is met on coins with high level of capitalization.

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