Bitcoin and other cryptocurrencies are created and managed with sophisticated encryption techniques. Rather than being controlled by a central bank like traditional currencies, these virtual assets have no overseeing authority.
Technology startups have recently begun creating new cryptocurrencies to raise capital. This happens through an initial coin offering, during which the startup creates a token and offers it in exchange for established cryptocurrencies such as Bitcoin, or legal tenders such as U.S. dollars. These new cryptocurrencies can then be traded in online exchanges that operate 24 hours a day, seven days a week.
Disclaimer: This is just for educational purposes only, must not be taken seriously.
What is Crypto Pump and Dump Scheme?
Pump-and-dump (P&D) schemes are a type of price manipulation in which an asset’s price is artificially inflated so that a cheaply purchased asset can be sold at a higher price. Once dumped, prices quickly fall, and investors lose money.
In the cryptocurrency market, P&Ds are organized through pump groups, which communicate through heavily encrypted messaging platforms. Investors learn about pump groups through advertisements on social media.
Large servers schedule dates where all of the members team up and pump a specific coin. These pumps can be extremely risky depending on the server you participate in. Pumps can last from seconds to days. The majority of the pumps they say, last only seconds. This is mostly because a lot of users now use bots to get in and out of trades extremely quickly. This causes huge dumps on the people participating and can lead to huge losses.
Where can I find these Crypto Pump Groups?
Such groups can be easily be found on social network platforms like Telegram, Discord, Instagram. Some of them are private groups that can be only be accessed if you are invited to such groups.
Example of Crypto Pumps
These pumping types of groups where more than 500,000 traders around the world can be found easily on Telegram, Discord, Instagram, and YouTube Channels.
Is it illegal to Pump and Dump in Crypto?
Although P&Ds are illegal in the stock market, there is little regulation of P&Ds in the cryptocurrency market. One reason for this is that most tokens are difficult to classify as investment or consumer products, so they don’t clearly fall under existing securities or consumer protection laws.
To be honest, Crypto pumping & dumping is happening since 2017 by various names as private groups. Various exchanges like Coinbase and Bittrex have taken major steps to hunts these admins to fine them. Talking about Binance, KuCoin, Bitmart and other exchanges where pumping is very common seems to be working. But these pumping groups might not work for Amateur Traders.
How pumps works and participate in such schemes?
Before participating in any pumps, few important things have to been known. Various pumping groups target a particular exchange so having a knowledge of how they work is an important part before getting into the pump.
Step 1: Creating an Account on a Particular exchange that is targeted, which are mainly
- Binance – Join Now
- KuCoin – Join Now
- Bitmart – Join Now
- Bitfinex – Join Now
- Huobi – Join Now
- Kraken – Join Now
Step 2: Before the pump having the groups Discord / Telegram active on your screen, maybe mobile or second monitor screen to execute faster.
Step 3: A countdown will be down before a particular coin is being selected for the pump.
Step 4: The coin will be revealed in 30 seconds’ time, later when it is announced you will have to immediately get into the trading part of the coin.
Step 5: If you gain profits even 3% or 5% just sell it, try now to be greedy. Sometimes the coin has chances to go over 100% or vice versa, depends on the groups
Instruction From Various Groups
These are some tips that are reposted from the groups advising how to trade properly.
- When the pump starts the price of the coin can spike pretty fast. if you limit to buy a coin we advise you to buy 75%. A 100% limit buy does not go through most of the time since the price is up. If you market buys the coin, the order will always go through.
- After buying the given coin, do not sell 100% of the given coin at once, slowly sell (25% at a time). Which causes the market not to instantly drop.
- DO NOT PANIC SELL. We have seen in the past that a lot of people will panic sell when they’re down on their initial investment. Just know pumps come in waves so there should be plenty of times within the pump that you will be able to sell with profit so do not panic.
- Make sure you have the particular coin pairing ready BTC/USDT or BNB/BTC where sometimes BTC is the main coin used for trading or USDT
Is it really profitable for Amateur Traders?
Just buying and Selling when the coin announced, will not gain you any profit, in most cases, you might end up in major losses. Having an experience of what you are dealing in before trading is very important, blind trading will lead you to lose all your money. When the signals are provided to the audience, it is all up to the user, when to buy and when to sell [ pull out ]. They are a few servers & groups, who give 1 on 1 trading help, but they also charge and sometimes not trustworthy.
Cryptocurrency Pump & dumps are a gamble. Most of the time you won’t even have 50/50 chances of winning because of the admins. There are ways to give yourself better chances of winning, e.g. using a bot and participating in pumps you know are fair. No matter what you are still risking your money so never invest more than you can afford to lose.
Asset Price manipulation is very common nowadays in the crypto world, as many YouTubers and Creator with amazing fanbases create over 10-20 Videos about a particular crypto coin in which he/she has invested in and manipulating its audience saying ” This particular coin can reach 1000x “. And after they gained profits from that coin, they choose another coin for content making.
You can now buy a Tesla with Bitcoin
— Elon Musk (@elonmusk) March 24, 2021
Bitcoin is my safe word
— Elon Musk (@elonmusk) December 20, 2020
So in my opinion Crypto Pumps and Dumps are done in indirect ways to increase its price, for example when Elon Musk Tweeted about Bitcoin and Doge every time it gets hyped and pumped, this is one perfect example of a Pump where the market gets influenced indirectly manipulated without knowing.