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A sudden pump and dump in the crypto market is often caused by a tactic known as a "whale trap." Here's how it works:
1. Pump: Large investors, known as whales, buy up a significant amount of cryptocurrency, driving the price up rapidly. This surge in price triggers FOMO (fear of missing out) among smaller investors, pushing them to jump in and buy.
2. Dump: Once the price is high enough, whales begin to sell off their holdings at the inflated price. This creates a massive selling pressure, causing the price to plummet, leaving those who bought in late with losses.
Whale traps take advantage of market volatility and traders' emotions, allowing large players to profit while smaller investors bear the brunt of the loss. Stay cautious and always be mindful of sudden price spikes!
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