Why market pump and dump ❗️

reason whales

Market pump and dump schemes often occur in cryptocurrency markets due to several reasons, especially involving "whales" (individuals or entities that hold large amounts of a particular cryptocurrency). Here are some key reasons:

1. **Market Manipulation**: Whales have enough funds to significantly influence the price of a cryptocurrency. They can buy large amounts to create a rapid price increase (pump) and then sell off (dump) at the peak to maximize their profits, often at the expense of smaller investors.

2. **Low Liquidity**: Many cryptocurrencies, especially smaller altcoins, have low trading volumes. This makes them more susceptible to price manipulation by whales.

3. **Herd Mentality**: When prices start to rise quickly, other investors might jump in, fearing they will miss out on potential gains (FOMO). This can amplify the pump phase, allowing whales to profit even more when they sell.

4. **Lack of Regulation**: Cryptocurrency markets are less regulated compared to traditional financial markets, making it easier for whales to engage in pump and dump schemes without facing legal repercussions.

5. **Coordination**: In some cases, whales might coordinate with each other or use social media and forums to create hype around a particular cryptocurrency, driving up its price before they execute the dump phase.