Introduction to the term: ‘Pump & dump’
A pump and dump ‘scam’ involves two groups of people. Firstly, there are the players who artificially increase the price of a specific coin by either promoting or endorsing it; an example of promoting/endorsing it could be done on a website like Hack Forums, by making one of the popular threads: “Invest in this coin or you will regret it!” or by using the Poloniex troll-box alongside multiple stealth accounts. These ‘pumpers’ have spent several days buying up cheap coins, and when they feel the need or urge to dump the, they will be building up the buzz.
As the coin gains momentum, the trading volume will increase and the coin(s) value will increase. Once the coin hits a desired price the player will begin selling all their coins, and people will start panic selling, dumping their coins onto the market and therefore sending the price(s) plummeting.
It is not too difficult detecting whether a coin is being primed for a pump and dump or if it is a legitimate growth. You will often be seeing buy patterns where it starts out low, the player buys his coins, once it starts growing, then that means the player is promoting the coin, and as soon as the player starts selling the coins, the coin will devalue again. The price is falling and rising ever so slightly each time the players buy, loading up on the cheap alt-coin without drawing too much attention to themselves and the coin.
Pumping the coin
Once the coin has been purchased, then the players will head to several forums and chat boxes and talk up their coin of choice. They will use several stealth accounts, and there can be multiple players joining in on this pump & dump, making it looks even more legitimate. The coin will be talked up until the player(s) see a buzz and people start buying in – this is when the pumping happens. The chatter will pick up on several trading platforms, and people will start purchasing the coin and pumping the price up towards the skyward. This starts fueling the buzz even further, and more people will begin buying the said coin.
Dumping the coin
Once the coin starts seeing its high point, then the players will start selling off their coins, though, they won’t be dumping all of them at once, as this is signalling the dumping process is about to begin. The dumping can happen in a matter of seconds or be dragged out over hours. Players will start selling small amounts of coins as fast as they can without drawing attention to the sell orders, and therefore dragging the price down before they are out. Once the players are out, a panic sell will begin, and this is when the dumping process happens. The price is no longer seeing a steady climb, the volume is all over the place, and people start realizing their own sell orders are not getting filled up. Panic sellers will crash the market by selling under market value just to quickly get out, and this will send the coin’s value down to the oblivion.
My personal opinion about pumping & dumping
Stop doing it. You are ruining the credibility the market has, and you are only making the valuation worse for the entire market. By pumping & dumping various coins, you are only making it harder for outsiders to continue their trust in the cryptocurrency market.
A pump and dump ‘scam’ involves two groups of people. Firstly, there are the players who artificially increase the price of a specific coin by either promoting or endorsing it; an example of promoting/endorsing it could be done on a website like Hack Forums, by making one of the popular threads: “Invest in this coin or you will regret it!” or by using the Poloniex troll-box alongside multiple stealth accounts. These ‘pumpers’ have spent several days buying up cheap coins, and when they feel the need or urge to dump the, they will be building up the buzz.
As the coin gains momentum, the trading volume will increase and the coin(s) value will increase. Once the coin hits a desired price the player will begin selling all their coins, and people will start panic selling, dumping their coins onto the market and therefore sending the price(s) plummeting.
It is not too difficult detecting whether a coin is being primed for a pump and dump or if it is a legitimate growth. You will often be seeing buy patterns where it starts out low, the player buys his coins, once it starts growing, then that means the player is promoting the coin, and as soon as the player starts selling the coins, the coin will devalue again. The price is falling and rising ever so slightly each time the players buy, loading up on the cheap alt-coin without drawing too much attention to themselves and the coin.
Pumping the coin
Once the coin has been purchased, then the players will head to several forums and chat boxes and talk up their coin of choice. They will use several stealth accounts, and there can be multiple players joining in on this pump & dump, making it looks even more legitimate. The coin will be talked up until the player(s) see a buzz and people start buying in – this is when the pumping happens. The chatter will pick up on several trading platforms, and people will start purchasing the coin and pumping the price up towards the skyward. This starts fueling the buzz even further, and more people will begin buying the said coin.
Dumping the coin
Once the coin starts seeing its high point, then the players will start selling off their coins, though, they won’t be dumping all of them at once, as this is signalling the dumping process is about to begin. The dumping can happen in a matter of seconds or be dragged out over hours. Players will start selling small amounts of coins as fast as they can without drawing attention to the sell orders, and therefore dragging the price down before they are out. Once the players are out, a panic sell will begin, and this is when the dumping process happens. The price is no longer seeing a steady climb, the volume is all over the place, and people start realizing their own sell orders are not getting filled up. Panic sellers will crash the market by selling under market value just to quickly get out, and this will send the coin’s value down to the oblivion.
My personal opinion about pumping & dumping
Stop doing it. You are ruining the credibility the market has, and you are only making the valuation worse for the entire market. By pumping & dumping various coins, you are only making it harder for outsiders to continue their trust in the cryptocurrency market.
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