$BTC $ETH $XRP
In the cryptocurrency market, price volatility is the primary factor for making profits. However, more important than that are the trust and psychology of investors, as this market relies not only on technology but also on investment strategies like pump and dump. Below is the pump and dump process of "whales" in the cryptocurrency market:
The Pump and Dump Process:
Bottom Zone
Whales start accumulating assets in the bottom zone, when the price of a coin is sharply dropping, and few people are willing to participate. This is the time when late investors begin to sell off, allowing whales to gather a large quantity at low prices.
Pumping Up to Create FOMO
Once they have gathered enough, whales will gradually push the price up in small steps to create a sense of FOMO (Fear of Missing Out) in the community. New market participants, seeing the sharp price rise, buy in, hoping the price will continue to climb. However, when the price starts to slightly decrease, they panic sell, fearing losses.
Trapping Buyers at the Peak
Whales sell at the peak, when the price reaches its highest, and new investors still hope the price will keep rising. Those who bought at the peak will quickly realize they are stuck and sell, causing the price to drop sharply.
Dumping and Resetting the Cycle
After selling off, whales cause the price to crash due to a lack of buying power. The price will continue to decrease until it reaches the bottom again, and then the next pump and dump cycle begins.
Market Cycle Theory:
Typically, during this cycle, the price of Bitcoin (BTC) will rise first, followed by Ethereum (ETH), then altcoins, and finally smaller coins. When investors see the price increase of large coins, they get drawn in to buy, only to sell off when the trend reverses, creating significant volatility.
Conclusion:
Investing in the cryptocurrency market is not just about technology or long-term potential; it also involves pump and dump strategies and investor psychology. If you do not understand this process, you could become a victim of price manipulation by the "whales." To avoid risks, you need a clear strategy and not let emotions drive your investment decisions.
