Understanding Pump and Dump Crypto

Pump-and-dump schemes historically rooted in economic fraud dating back to the 1700s have grown in complexity and reach with the advent of blockchain technology and cryptocurrency trading. In this article, we will learn what crypto pumps and dumps are, how they work, and how to identify them.

Understanding Crypto Pump and Dump Groups

Crypto pump and dump schemes involve fraudsters collecting certain cryptocurrencies, artificially inflating their prices through the spread of false information (pumping), and selling their holdings to unsuspecting buyers at a higher price (dumping). This planned manipulation caused the deceived buyers to suffer losses when the inflated prices plummeted.

These schemes are orchestrated by self-organized groups operating online that often openly recruit members on platforms such as Discord and Telegram. In these groups, there is a hierarchical structure with a leader or admin managing the pump, while members follow instructions to participate in the scheme.

How Crypto Pump and Dump Schemes Work

Group Dynamics 

Crypto pumps and dumps have varying levels of activity with some cycles running daily while others operate less frequently. Members are notified of upcoming pumps and VIP members receive advance notification to take advantage of the scheme.

Execution

Admins share important details such as target cryptocurrency, start time, and type of operation (free for all or ranked). Members then coordinate to pump targeted coins, often using tactics to obfuscate information to prevent automated detection.

Market Manipulation

When the pump starts, admins and members spread the news about the price spike through social media platforms thereby creating Fear of Missing Out (FOMO) among outside investors. This influx of buyers further drives up prices before the inevitable crash.

Recognizing Crypto Pump-and-Dump Signals

Obfuscated Information

Pump announcements often hide important details using graphics or deliberate obfuscation to avoid automatic detection.

Notification Hierarchy

Members receive notifications based on their rank in the group with VIPs getting early access to privileged information.

External Promotion

The scheme organizers encourage members to spread the word about the pump across social media platforms to attract external investors.

Conclusion

While crypto pump and dump schemes promise quick profits, they are inherently fraudulent and carry significant risks for their participants. Recognizing the signals of these schemes and exercising caution when faced with profitable investment opportunities can protect us from falling victim to market manipulation. 

As with any investment, conducting thorough research and understanding the underlying fundamentals is critical to safely navigating the volatile cryptocurrency market.

Also Read:

Understanding Pump and Dump Schemes in Cryptocurrencies

Getting to Know Scammers in Cryptocurrency

Exploring Horizen (ZEN): A Comprehensive Overview

How to Buy Crypto on Bittime
You can buy and sell crypto assets in an easy and safe way through Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappbeti.

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.

Monitor price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.