What is Pump? What is Dump?
Pump and Dump (Pump and Discharge): is an illegal act in the formal financial market. This action is created by 1 or a group of people pushing the price of an item up, attracting new investors to jump in, and then the original group exits with a profit.
How do Drain Pump groups work?
Pretty interesting question, isn’t it? And the answer is not as complicated as you think.
Basically, these groups became famous using popular marketing techniques (that is, social networking). They start websites with “user-only sections”, Facebook groups and/or Telegram groups, and promote these pages on their social channels. Almost all of them promise you that “only the sky is the limit”. Like my dad used to say:
“If something sounds so good to be true, chances are it is TOO GOOD to be true.”
If you want to be part of their “inner circle” you may have to pay the group a monthly fee. This contributes to a feeling of exclusivity.
Pump and Dump process
1. The founders of the group will choose a coin they will pump, usually small-cap value coins. They will start buying coins before anyone else knows they will pump it.
They buy, smaller amount, bit by bit without increasing the price too much but it is their motivation to earn a lot of cryptocurrency before others.
Either way, since these are low-cap coins, you’ll likely see a small pump before the big pump actually happens. Let’s call it the “pre-Pump” phase. This “pre-Pump” period is the time to buy if you want to make a little extra profit.
2. The team will communicate the pumping to their “pull group”, usually the users who get paid and start raising the price. The founders may have sold some of their coins to mitigate the risks.
3. This group communicates with their followers via social media, announcing that a coin is being pumped.
People see the green ‘2 units’ numbers so they can start buying while the founders and team pull the strings slowly start selling their shares more.
Once the signs of growth stop, they will sell big and Pump now becomes Discharge.
Here are a few use cases:
Set aside general concerns and curiosities to focus on what’s being pumped
- To prevent investing in coins
2. To buy coins that pump regularly when they are dropping in price.
3. To bet smaller on coins being pumped
4. To be the smartest!!
The only reason Pump Drain plans work is because people want to buy when the numbers are green!! It feels much more comfortable.
We will take a closer look at the 5 use cases below.
How to be smarter than the Drain Pump groups?
1. Be curious but don’t invest it all in the cryptos being pumped
Never all in
2. Now You Can Know What “Don’t Invest In”
You can use the P&D website to learn the “don’ts” if you are looking for long-term crypto investments, cryptocurrencies that pump and dump frequently may not be a safe bet. best for you.
3. Some coins are pumped over and over again. Buy the pumped crypto when it’s all emptied
Exhaust groups also have their favorite coins. Don’t buy while the coin is actually pumping.
Buy when it is released and wait a few days, weeks or even months, place your sell order, and when it is pumped you will be the first to make a good profit.
Note that there will always be a risk that the crypto you buy will never be pumped again. You should be 100% aware of this risk. We have seen some coins get pumped over and over again.
4. Betting low on coins being pumped
Do not be too greedy and should not invest too much capital.
Still high risk but you will be able to make a lot of profit quickly if you follow the above guidelines.
5. Become the smartest? How or what?
3-step process + a few tips to “beat” the Pump and Discharge groups!
1. Check which coins are being pumped
2. Make sure it’s not (yet) pumped “crazy”. You can see the chart on CoinCheckup.com. Is there any noticeable small growth without a spike?
- If a coin is pumping “crazy” then you are probably too late.
- If a coin has been pumped in the past, chances are it will be pumped again.
- If a coin was pumped recently, it will continue to be pumped.
3. Go to CoinCheckup.com, search for the name of the coin and check its overview.
- Let’s see if there’s any news that there’s a reason for it to grow.
- Check the bases and algo.score, does this coin have any reason to grow, do big investors have “good reason” to buy it for long term holding?
- Check out Technical Analysis, is its buy signal high?
- If the answer to the above questions is NO. There is a strong possibility that this crypto is in the “pre-Pump” phase and it could be the right time to buy and put in direct sell orders.
- If you want to place sell orders, set them to different mini-orders so people keep buying real crypto while you’re selling while the pump is still going.
- Don’t be too greedy, also don’t forget that 10% is a “huge” profit, it is true that you can earn 100% within 1 hour but don’t become too greedy.
- Invest an amount equivalent to the last trade so you can get out of your position quickly with a little profit.
Why Pump and Dump is easy to do in the crypto market?
If you do Pump and Dump on the stock exchange, you will be arrested, fined or even jailed. However, in the context of the cryptocurrency market being informal, this game is very common. Thus, the first reason is that there is no governing law.
The second reason is that although the cryptocurrency market is very large, worth up to $800 billion, the value is mainly in the Top 10 altcoins, the top 10 are Bitcoin, Ethereum and Bitcoin Cash, Ripple, ADA, DASH, TRX, LTC, ETC, NEO, NEM, XEO remaining other products have low value, few people trade. Therefore, other crypto-currency products are very susceptible to price manipulation.
With just a few traders, the price can bounce back very strongly. There are cryptocurrencies that are so small that it only takes about 50-80 bitcoins to price the entire market. So it’s very easy to Pump and Dump small cryptocoins
Results after Pump and Dump
After being pushed up through the Pump and Dump process, the price of a certain cryptocurrency will usually return to its previous position before the Pump and Dump.
According to Tapchibitcoin.vn
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