When participating in the market, we all have a common goal: Making Money. Don't confuse investing for technology with seeking profit. Superior technology, huge funding rounds, or 'rosy' stories are merely tricks to build trust. In this market, trust is the key factor leading to growth, not technology. When the market declines, even cutting-edge technology will be abandoned. Altcoin, in essence, is just a financial game that 'whales' use to make huge profits.
Market Cycle
Surely you have heard about the market cycle:
BTC rises first, it is the leading 'machine'.
After that, the money flows into ETH.
Next are the top coins.
Finally, the smaller Altcoins or trending ecosystems come.
With each growth wave, the main goal of whales is to create FOMO (fear of missing out) in the community, to lead the influx of money into crazier moves.
The Pump and Dump Process of Fat Whales
1. Accumulation Phase
During the market bottom phase, whales begin to purchase in large quantities.
Source of goods: Goods come from small players who have lost or lost patience after a long period of price decline.
Characteristics: Prices often move sideways for a long time, with little volatility. This is the ideal time for whales to accumulate large amounts of coins.
2. Price Push Phase
Whales will not push the price up in a straight line. Instead, they will push the price in waves to create liquidity and stimulate crowd psychology.
First wave: The price rises, attracting attention. New players see the strong price increase and start to jump in to buy. However, they often panic easily if the price drops 10-20%, leading to early sell-offs.
Shakeout: When the price has risen, those who bought at the bottom often take profits early for fear of a price drop. This helps whales to eliminate some of the small players.
3. Adjustment Phase
After a wave of increase, the price will move sideways within a small range.
At this point, the 'top chasers' are impatient and sell off to switch to other coins that are rising.
Whales' strategy: Continue to accumulate from those who are selling.
4. Pump Even More
After removing most small investors, whales will push the price up strongly, possibly doubling or tripling in a short time.
Herd effect: Those who took profits earlier regret and jump back in to buy. Newcomers see the strong uptrend and also participate, hoping the price will continue to rise.
5. FOMO Peak Stage
When the market becomes too hot, with accounts increasing 20-30% daily, the general psychology is that 'the price can only go up'.
Misguided mentality: Investors believe the price will continue to triple or quintuple and do not want to sell for fear of missing an opportunity.
Whales' actions: They start to slowly dump their assets. The price will stall or slightly decrease, but investors do not pay attention because they believe this is just a slight adjustment before further increases.
6. Dump and Free Fall
When whales have dumped all their goods, there will be no buying support, and the price will free fall.
Small investors are stuck at the peak, suffering heavy losses.
The market returns to the bottom, starting a new accumulation cycle.
Lessons from the Pump and Dump Process
Understand the nature: This is a financial game, not a technology investment.
Control emotions: Don't let FOMO or fear dictate your actions.
Follow the cycle: Capture the cycle to enter and exit reasonably, avoiding buying at the peak or selling at the bottom.
Be patient: When the price moves sideways, that is the time for whales to accumulate.
This market is not for those who want to get rich quickly without understanding the rules of the game. You should only participate when you are ready to learn and accept risks.
