Hi, Friends are today this post is for the new crypto traders. Beginner traders must read this post very carefully before involving any crypto trade. You may have heard about crypto Pump and Dump before reading this post. These are two different terms in the crypto market. Many crypto communities more talk about crypto Pump and Dump in their discussions. Even many communities are only made for the Pump and Dump of cryptocurrencies. It can be very harmful to beginner investors, they can easily be the target of such communities.
What are Pump and Dump in Simple Words?
Pump and Dump in the cryptocurrency market are related to the sudden change in the prices of any coin. The Pump and Dump techniques are used to manipulate the market, “bidding prices”, “pumping prices” of a certain coin up (Called Pump), and then constantly selling to bring the price of that coin down to a terrible level (Called Dump) which is even lower than the beginning price of the pump. These Pumps and Dumps are very common in markets such as the stock market, forex, or gold market, not just in cryptocurrencies.
Are Pump and Dump a Legal Action?
No, the Pump and Dump of any coin or stock is an illegal action. In markets like securities investors, all traders are protected if they become victims of such an action. But in the cryptocurrency market, traders are not protected because in most countries they do not have a legal framework.
Therefore when you start investing in cryptocurrencies then you must have proper knowledge about these pumps and dumps waves, so you can protect yourself.
Who Do Pump and Dumps in Crypto Market?
Pump and Dumps are usually done by large organizations called sharks and whales. Sharks are those organizations that hold large capital in the market and whales are those who hold super large capital. They can navigate the market in any direction with their large budget holdings. This is also called crypto market manipulation.
How Pumps and Dumps Organizations Finds their Targets?
Pumps and Dumps organizations find their targets in the form of newcomers on social media groups (Usually on Facebook, Telegram, Instagram, and YouTube). In all countries, there are many local social media groups that are handled by sharks and whales to manipulate the market. Beginner traders are inexperienced and eager to make a profit quickly, so they are the primary targets of these groups.
How Pumps and Dumps Organizations Attract Beginner Traders?
They regularly post screenshots of pump coins (Which shows 20%, 40%, or even 50-60% profit in a few minutes) on their social media groups to attract people. For the first time, they let the newcomers made a little profit from their group, but the more they follow them, the more money they lose.
Here Are Some Tips to Save Yourself from Being a Victim of Pump and Dump
You can follow the below tips to save yourself from being a victim of Pumps and Dumps created by sharks and whales.
- If you are a beginner and just have started in the crypto market, then you should not invest a large amount in small-sized coins. You can even join these groups to get some knowledge to understand the process of Pump and Dump.
- If you want to invest in small-sized coins then you can try a small amount.
- If a coin has already pumped then you should not buy because you have a high probability of losing money at the highest peak of the pump.
- You should choose well-known exchanges for trading because they only list reputed coins, they do not list junk coins.
- Never invest all money in a single coin, always use 3-4 or more coins with research to invest. Invest 60-70% of your money in Top coins like BTC, ETH, LTC, XRP, USDT, TRX, etc., and the remaining 30-40% use for trading, this will reduce the risk.
- You may receive the pump notifications from the groups you may have joined. Do not rush to grab the deal. Do proper research of that deal before investing.