source: www.returnofkings.com

But when a lot of people are buying these at high prices (because they’re afraid they miss the boat) the price will likely go down, usually quite fast and usually below the initial price before the pump. What you get then, when traders who bought at higher prices see their investment go down the drain, is panic (of course, no one likes to lose money) and most will then sell their coins at lower prices (dump) to try and cut some of their losses.

Is this always an evil plan to cash in?

Personally, I don’t believe it is always the case. As a matter of fact, one person alone can have influence on this kind of behavior. One only needs enough (wealthy) followers and if this person is enthusiastic enough about their favourite coin (like we all are about Steem 😍) this could cause a storm of new investors to run, in an attempt to get their hands on a coin while the price is low.

To be honest, I even believe that one person’s actions could cause a strong effect, depending on the coin.

source: uk.businessinsider.com

I will give an example of a personal experience with this.

How one simple action can make the price of crypto fly, but only for a short time.

A couple of months ago, I needed funds to finance my trip to Lisbon for Steemfest. I had made a deal with myself that I would pay for all of it only with Steemit earnings and cryptocurrency profits. I thought to myself I would buy coins, to sell them not much later for profit. However, I ended up buying crypto that I really didn’t want to sell any time soon. So what to do?
I decided to take a gamble to see where it would bring me.
At the time I loved nova exchange, because it had all kinds of coins no one has ever heard of.
I went there and literally picked 2 coins with an ‘Eeney-meeney-miny-moe’. You know, like Negan, but less dramatic and without Lucille…
Now, these two coins hadn’t done anything for some time. Neither one of them. In fact, one of them is completely dead now, the other hanging on by a thread.
The two coins I bought (I spent about $35,- on each) were: Caliph and Forever coin. Turns out: forever wasn't forever LOL.
The very next day, I was checking these on my phone and almost choked.
They’d gone up by a whopping 480% and 630%! So of course, I sold them right away and with that, paid for part of the trip.
I’m still not sure what happened, and why, but my theory is that since they weren’t doing anything and suddenly they were (because I bought some) some people who were watching these coins decided to buy, which made the price go up and in its turn attracted more buyers.
Of course, something entirely different could have gone on, but just let me have this one OK: I single-handedly influenced these buyers into buying and raising the price 😆.

Another coin I was very lucky with was Coinonat. I bought this after it had gone up by 400%.
I invested a tiny amount but was willing to take a chance on a hunch. I was lucky, very, very lucky, because in total this coin went up by approximately 3000% in just one day! 😱 And then dropped faster than lightning can strike….Like I said: I was lucky. But please don’t try this at home...😆

Infamous: The chaincoin pump and dump

Not so long ago, there was a guy named Max who had quite a few followers on youtube.
He started an experiment. What seemed to be dead coins, would be bought by the community he had behind him and then hodl’d.
Personally, I fell for it, mainly because the man was very convincing, and I believe in the good in people. I invested $50,- in this coin, buying for about 40 cents each and saw the value rise quickly. Two days later, my $50,- was worth $600! Now, the hodler community was standing behind their man, but because I didn’t know him that long, nor that well and an increase like that doesn’t come along every day, I sold. I know: I was weak.
But I was also lucky (maybe even smart?) because sure enough, not long after that, the coin dropped faster than you could blink and lower than it was before.

Even though there are quite a few people who started to say that Max was just trying to pump the coin to fill his own pockets, I really don’t believe his intentions were bad. But I guess we’ll just never know for sure.

Beware of those people who can...as always: do your own research, don’t follow the hype.

Source: giphy.com

As I mentioned before, if someone has a large following - this can be here on Steemit, youtube or Twitter and this person mentions certain coins and predicts they will rise in price, you can wait for the response. His or her followers will trust this person and buy into this. And a natural response is for the coin to indeed rise in price because all these people are buying...
Of course, it doesn’t have to be BS, but it can be. Just always be aware that this person who seems to have your best interest at hard, could secretly be just a very selfish Mr. Burns. However you like to put it: NONE of us ever really knows what a coin is going to do. It will always be influenced by external factors we don’t control, like the closing of an exchange, or news coming from China or Russia etc.

So if you get triggered to buy a coin because someone else said so: ALWAYS research more and follow your own instincts in this, not someone else's.
The other day I was talking to a friend of mine (who hasn’t invested anything yet) and his words were: But it kinda is a ponzi scheme, because you tell people that this coin is great and they will buy it…
My reply to this: I never hold any guns to anyone’s head, and I always tell them to do their own research, don’t take my word for it. So how could that ever be a Ponzi scheme? And besides, I doubt if my opinion alone is enough for hundreds or thousands of people to go and buy a coin. He had to agree.

I can’t stress this enough: You can listen to anyone’s advice. But it is ultimately you who will have to make the decision. So for your own sake and that of your money: research and read until you can make informed choices. I did and I still do, and I can’t complain: it’s all on me.