Pump and dump groups are a new phenomenon in the world of cryptocurrency trading. They take advantage of their own hysteria to manipulate prices, then disappear before anyone can catch them. How do you avoid getting caught up in one?
The “next pump and dump” is a term used in cryptocurrency trading. It refers to the next coin or token with the greatest potential to increase in value after the current one has been pumped. The “Pump and Dump Groups | Navigating the Crypto Waters” is a website that provides information on upcoming pumps and dumps, as well as how to trade them.
Pump and dump operations are becoming more common in the blockchain world. During the six-month period between mid-January and early July 2018, researchers at The Social Science Research Network (SSRN) discovered 4,818 crypto pump and dump operations. Researchers from institutions in the United States, Mexico, and even Israel participated in the partnership.
The researchers employed a thorough data gathering procedure that was only focused on Telegram and Discord. Scammers exploit these two popular social messaging apps to entice thousands of naive investors on a monthly basis. The report went on to reveal that using Discord, obscure and low-cap cryptocurrencies made an average profit of 23 percent. When using one of the top 75 coins, the return is just 3.5 percent.
What Is a Pump and Dumps System, and How Does It Work?
Pump and dump schemes aren’t exclusive to the crypto world. They exist in every market that begins to draw big quantities of money. They originally gained popularity in the early 1600s on the earliest stock exchanges, and they may still be found in penny stocks on today’s main stock exchanges.
Strong marketers begin pump and dumps by promoting or pumping certain coins, shares, or assets in the hopes of creating enthusiasm and briefly pushing up the price. Buyers must be enticed to hop on board or risk experiencing #FOMO. With the growth of social media platforms and the relative anonymity they provide, this has never been simpler.
Most of the time, these marketers purchase the currency before marketing it to guarantee they receive a decent deal. Pump and dump schemes are more effective with low-capitalized currencies since it is much simpler to manipulate the price. In addition, the payoffs are obviously superior. It’s time to launch operation “let’s change the price!” after they’ve recruited enough investors (suckers) to the organization.
During the South Sea Bubble, the “Night Singer of Shares” was hawking shares on the streets. Amsterdam in the year 1720.
The founders signal that it is time to begin purchasing, and the combined buying pressure swiftly drives up prices. Insiders are already started to sell their coins without telling users who are members of the so-called insider or VIP club. Many of these organizations even have the chutzpah to demand a fee for admission, furthering the impression of exclusivity.
In order to keep drumming up support for the scam, they would often leak material to other social media outlets in the hopes of attracting additional fools. They start the dump when the price has changed sufficiently, selling all of their coins and pocketing a hefty profit.
How to Keep Yourself Safe
Avoid Coins with Low Liquidity.
Low-cap coins are recommended by certain investors for purchasing and trading. With large price increases, this may be a successful technique provided you know what you’re doing. Experienced traders, on the other hand, will tell you that it’s far simpler to get into low-volume assets than it is to get out. If you do decide to invest on low-cap coins, be aware of the significant risk and don’t put all your eggs in one basket. As the saying goes:
“It’s probably too wonderful to be true if it sounds too good to be true!”
Avoid currencies with daily volumes of less than $100,000 as a general rule. In crypto, the bar is set fairly low, and that figure may even be overly aggressive. As usual, this is not financial advice; you should do your own research. Bitcoin may be uninteresting in contrast to other currency, but there’s a reason it’s still around 10 years later. On our cryptocurrency price tracker, you may see several low cap examples:
Avoid Pump and Dump Organizations.
Even while this may seem like common sense, high-profit scams like Bitconnect continue to deceive investors. Many individuals are presently attempting to advertise pump and dump organizations on the internet. Scammers continue to benefit handsomely from it. Telegram and Discord, as indicated in the study, are still popular hangouts for these organizations, so if you’re a frequent user, be on the lookout. Even on YouTube, some dubious influencers are attempting to promote these channels.
You may now be tempted to get aboard the pump and dump bandwagon yourself. It’s dangerous to try to outsmart the next person or an insider. Please, please, please, please, please, please, please, please, please, please, please, please In and of itself, many organizations are pyramid scams. Although group leaders are courteous in providing admission and departure times, there is no reliable means of knowing when they are really entering and leaving. You could be fortunate enough to make a profit, but is it really worth the risk?
Tools that disclose pump and dump signals, on the other hand, are worth keeping an eye on, if only to avoid undertakings with a high perceived risk.
Last Thoughts
Pump and dump organizations are unquestionably a problem that must be addressed. If investors are in it for the long run, they need a higher degree of security. This is primarily due to the lack of regulation around cryptocurrency, however measures are being attempted to rectify this. Despite the fact that many coins will be worthless, the principles of Bitcoin and other cryptocurrency initiatives remain sound. Cryptography as a whole isn’t going away anytime soon.
Much of the mainstream media focuses on bitcoin market corruption. This conveniently overlooks the reality that our existing financial system is based on pervasive corruption in governments, companies, and central banks. The only way some of us will learn is to be duped and then learn from our errors, as Bitcoin enthusiast Andreas Antonopolous so eloquently puts it.
That isn’t a justification for pump-and-dump operations. Self-education, on the other hand, is your greatest ally in navigating these treacherous seas. Make sure you don’t end up clutching the bag, or, to put it another way, making sure you don’t end up using the bag as a lifeboat.
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The “ethereum pump and dump” is a term that refers to the practice of buying cryptocurrency in anticipation of an increase in its price, then selling it quickly for profit.
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