In the cryptocurrency market,
("Pump and Dump") refers to a manipulative scheme where a group of individuals artificially inflate (pump) the price of a cryptocurrency, and then sell (dump) their holdings at the inflated price, often causing the price to drop.
Here's how it typically works:
Pump:
1. A group of individuals, often organized through social media or messaging apps, coordinate to promote a relatively unknown or low-value cryptocurrency.
2. They spread false or misleading information about the cryptocurrency's potential, partnerships, or technological advancements.
3. This creates hype and attracts unsuspecting investors, driving up demand and prices.
Dump:
1. Once the price has increased significantly, the orchestrators sell their holdings at the inflated price.
2. This floods the market with sell orders, causing the price to drop rapidly.
3. Unwary investors are left with significant losses, as they bought at the inflated price.
Warning signs:
Protect Yourself From Pump-and-Dump Scams.
Always remain cautious and informed.
By educating yourself about how pump-and-dump schemes operate and recognizing early warning signs, you can make more informed investment choices and steer clear of market manipulation tactics. Stay safe and invest wisely.
