The One About Pump 'n Dump
When there is money to be earned there will always be people who are trying to take advantage of others. With cryptocurrencies because of the lack of regulations there is a higher risk of scamming and scheming.
One of those dubious schemes is called the Pump ‘n Dump group. The group is made up of a leader or captain and a group of followers (mostly on Whatsapp or Telegram). The leader of the group informs the followers about the details of the pump and dump.
Details include: The targeted Exchange, the time of the pump ‘n dump, the cryptocurrency needed to buy the coin and the strategy, all but the cryptocurrency that is going to be pumped.
The strategy basically is to all start buying at the same time (the more followers the better). This will cause the price to skyrocket. After that the group will hold the coin, depending on the instructions of the leader for 10 - 30 minutes.
During the operation the leader will send the instructions and updates to his followers
The next step is hyping the coin on Social Media (Twitter for example) to lure in interested parties. When FOMO induced buyers also start trading, the coin will keep the upward momentum going, achieving 400% - 600 % gains.
After the pump the leader will signal for the selling part of the operation, he will instruct his followers to start selling the coins (above market price to keep the pump going).
Another part of the strategy is not to sell in bulk but in parts so that you avoid a complete dump of the coin
After all is well and done, the group should have made some real money, really fast.
These kind of ads are used to gather a large group of participants. I am not adding a link to this picture because I don't want to promote these groups or activities.
But…..In reality things are not as advertised.
You see the only way to really profit from these kind of groups is if you know beforehand which coin is going to be pumped.
This way you can buy your coins before anyone else and avoid the massive increase in price that will occur when the pump ‘n dump group start buying coins.
With a group of 1500 member the price of the targeted coin can double in a couple of milliseconds, so it is near impossible to buy the coin at a reasonable price.
And that’s when things go even more sideways.Can you imaging managing 1500 nervous cryptotraders with nothing more than a messaging app? It would be hard to do even if you knew everyone in the group but with total strangers and money on the line, things go south really, really fast.
After people realize that they bought in too late, they start to go off script in an effort to reduce the loss and start dumping fast. This causes others to follow suit and a couple of minutes after the pump started the price starts to drop fast (and I mean real fast).
So you probably wonder why to bother at all? Well, there is a small group that always comes out ahead and those are the leader and his inner circle. Because they already bought coins before the coin was announced to the rest of the group.
So when the followers start buying, they actually are already buying the coin at a higher price.
Things get even more devious, because now the leader and his inner circle have the option to sell their cheaply bought coins to the followers who are participating in the pump ‘n dump with insane profits.
In theory a pump 'n dump could actually workout for everyone, I am sure of that (besides the morality of it all). But what you need is a dedicated, disciplined group who follow the instructions to the letter otherwise the followers will never get something out of the pump ‘n dump.
Great article. I really hate Pump&Dumps and think people that do them are parasites and they are harming the cryptocurrency world.
Hey @sydesjokes, thank you for stopping by, I really love Kryptonia man.
It's true that these pump 'n dumpers are hurting the cyptocurrency scene just to earn a quick buck. The way I see it they are just dumping their coins on their unsuspecting followers. If it sounds too good to be true...well it usually is.
Hi. am a lover of your post and just say this is epuc. I must say that I like your post and it am inspired.good job , thumbs up, keep up the good work
Thanks man, It is comments like this that keep me going. Steem on!
Pump and Dump clubs can be very dangerous, you can get your Exchange account banned and could lose your money. Great write up, just beware if you are unsure of the dangers.
I know that exchanges threaten people with bans but I am unsure how they would enforce it. How do you differentiate between pumpers and regular buyers?
If all of a sudden 500 people buy the same coin, then all of a sudden sell it at the same time, then you know who they are, mark their account, when it happens again you have your crooks.
Probably one of the best posts i have read. The design of you blog is giving me some nice ideas to improve mine. But now to the content:) :
Well this groups are like poison to our crypto community, but the only think to do prevent their power is to inform the people, like you did. Thanks :)
I would love to see you check out my blogs. There is more coming in the next days.
Greetings from Germany
After such a great comment on my post and the resteem, how can I not check out your posts?:)
I will follow you and read your posts. I checked out your latest post, it is really good. You should write more often. Steem on!
Hi :) Before this post to be honest didn't knew that how actually this pump and dump system happens. I was always confuse , but now with this post I learnt a lot . :) Good Job Dear
I only learned about these groups myself. At first it sounded like a nice way to earn some quick bucks. But after some research I soon learned that it is just another way of duping unsuspecting traders.
It sounds extremely risky and not beneficial at all to cryptocurrency long-term. These are the types of groups that force government intervention, unfortunately. I'll be interested to see how all of this develops. It is obvious that many of these groups exist because many really bad coins have jumped significantly only to later fall off of the map.
Thanks for the post and the information.
It is both risky and does a lot of harm, although the leader of the groups say that they are actually "helping" the coins when in reality they are only helping themselves. There is little what can be done about it except warn people not to join these group and point out the risks.
And you are absolutely right, it is these kinds of things that the government will use to crack down on crypto.
Thanks for the reply and great comment. I used to trade penny stocks (about 10 years ago) and the same was true. Since I wasn't a part of these groups, I was often on the wrong side of these moves. Investing in Steem and Steemit with time and effort and hoping to help build the platform and my portfolio at the same time.
Take care
hola soy nueva en la comunidad me gustaria tu ayuda @sahari
I have no idea what you said, my Spanish is very poor. I will just interpret this as follows:
"You sir are a brilliant writer and this is the best blog I have ever read" ;)
He said he would appreciate your help. He is new to the community. In other words, your translation is very accurate :) And I am trying to say the same :D
Last night I saw this coin Janus going to + 6700% (with value above 22.00 dollar). This morning dumped and value at 2,47
That is the kind of coin these groups target. Buy and get out, only thing is no one except the insiders of the group can take advantage of the surge.
Yep. And the only way to grab a (small) bite as well, is stay awake and be alert 24/7.
If you see a very huge spike upward in the chart, probably it is a pump. So stay way of buying moved by FOMO.
Good advise, it is better to benefit from a coin that grows in value because of the increase in demand instead of that it is "engineered". I like to use a long term strategy because it pays more in the long run. Instead of get rich quick schemes
Nice info in the post.
I have also new post for new comers to read and learn Technical Analysis.
I hope this also helps to understand crypto market
https://steemit.com/crypto/@asifgoraya123/japanese-candle-sticks-learn-technical-analysis-and-other-info
My man, thank you. I will look up your post. I am in desperate need of learning how to read candle sticks (seriously). I have read tutorials and watched videos but still I just can't get the hang of it.
You will learn a lot from my posts.
I hope that will help you. do not forget to upvote and follow if you like my posts.