THE PUMP-AND-DUMP SCHEME: HOW COINS ARE MANIPULATED
Let's break down the pump-and-dump scheme with a simple example:
1. *The Pump Begins*: A group of people starts hyping a small, inexpensive coin. They create buzz and excitement to make others believe it's incredibly valuable.
2. *Price Shoots Up*: As the hype spreads, people rush to buy the coin, pushing its price up artificially. This is the "pump" phase, fueled by FOMO (fear of missing out).
3. *The Dump Happens*: The same group that created the hype begins selling their coins at the inflated price. They cash out big, leaving the market flooded with overpriced coins.
4. *The Aftermath*: Once the group exits, demand vanishes. The coin's price crashes back down, leaving those who bought at the inflated price facing heavy losses.
This same cycle often plays out in financial markets, especially with small, lesser-known coins or stocks.
*Key Takeaway*: Always research before investing and be cautious of unusual, rapid price surges. Don't let FOMO drive your decisions. It's better to miss out than to lose out.
Stay informed, stay safe!
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