PUMP & DUMP — A WAY TO MAKE OR LOSE MONEY QUICKLY?
Pump and Dump is one of the most popular cryptocurrency scam strategies.
This deception appeared before the very idea of cryptocurrencies, back in the stock market.
It consists of the fact that an asset owner artificially raises its value to sell it at the highest possible price.
After the scheme initiator “dumps” its share, the value collapses, and investors lose their money.
In the cryptocurrency market, “Pump and Dump” usually uses so-called “junk” coins — cheap coins with low market capitalization. This can be bought cheaply, and for a sharp rise in value, it is enough to attract a relatively small number of investors. To create increased demand, they use fake positive news about the project, fake financial statements, and “insider information leaks” about an imminent rise in the price of one or another digital asset.
There are numerous little-known, low-cap (“junk”) coins, and the development of social networks and instant messengers has made it much easier to attract investors. In this regard, the “Pump and Dump” scheme is popular among scammers in the cryptocurrency market.
How “Pump and Dump” works.
Having chosen the exchange and the coin used for the scam, the organizers first buy the selected currency at a low price in small volumes to provoke an increase in the rate ahead of time. Then the “pump” begins — work on raising the rate.
In the exchange, social networks, and messengers chart, information disseminates the inevitable, imminent rise in this coin rate.
The pump organizers’ bots place and buy up many large orders to buy it, transferring money from one pocket to another on the exchange.
Then the coin starts to buy up many investors, attracted by the prospect of easy money, and its rate rises even higher.
The organizers of “Pump” sell the accumulated stocks of coins at an inflated price (“Dump”) — the exchange rate collapses.
The organizers of “Pump” get big profits, and the rest — losses.
Pumps are held with “junk” coins and assets at the top in market capitalization.
And here, already substantial funds are required for manipulation — tens or even hundreds of millions of dollars.
Short-term “pumps” with “junk” coins are not so dangerous since you can not participate in trading on such currencies, and at the same time, you are guaranteed to protect yourself from losing funds.
It is much more difficult when long-term pumps are produced with well-known coins.
In this case, you need to understand the reason for the asset’s growth and never buy this or that asset with a sharp increase in its rate.
Avoid FOMO syndrome — “Fear of missing out.”
In our case, this is the fear of missing out on possible profits.
How to protect yourself from “Pump & Dump” almost 100%:
✔️ do not participate in the trading of little-known coins — there is a higher risk of getting into this type of scam;
✔️ do not trade on little-known exchanges — such deception schemes can often be used on such trading platforms;
✔️ turn off your FOMO — it is better to lose profit than to lose all your assets;
✔️ do not join groups on social networks and messengers, where they promise “insider” information and “signals” that supposedly guarantee your income on “pumps”, only the organizers of such resources earn here.
The constant secure receipt of a guaranteed income is much more important for any investor than making money on a cryptocurrency pump.
Unfortunately, this realization comes to many novice investors after they have lost quite a lot of money.
Praem Capital has its solutions to automate trading, which guarantees investors a constant income and eliminates the risk of losing investments.
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