PUMP AND DUMP
While the term "GET RICH QUICK SCHEME" is usually associated with "TO GOOD TO BE TRUE" in the fiat world, This is vastly different in the cryptocurrency world. This is especially true in Pump and Dump.
In a nutshell:
Pump and Dump (PND) is a small group that create a buzz or hype around an shares (our case a COIN) to lure potential investors via the increasing prices, volume and demand (PUMP). Once the small group sell (DUMP), the prices plummet leaving investors with a loss (A.K.A BURN).
How PND works in crypto-currency:
In the Cyrptoworld, this is a created group (telegram, stack etc) ranging from 500-16000+ members. The admins of the group broadcast a certain DATE, TIME, TRADE PLATFORM a days in advance but NOT the coin for the planned PND. Once the exact date and time is reached, the coin is revealed to members of the group at which the price usually drops within a few minutes if not seconds.
This scheme or scam once popular in the penny stocks of wall street, has transferred into the cryptocurrency. While illegal in the fiat market, the unregulated and lack of ethics committee makes it perfectly legal in the world of coins (part of the decentralised persona).
HOW TO SPOT PND:
1)The usual way to identify a PND is spotting an usual increase in the price for a short period of time followed by sudden decrease back to where it usually was prior to the PND.
2)Spot the slight increases in coins prior to the peak (as shown below).
- Be part of the group that coordinates the PND.
SHOULD I BE INOLVED IN PND?
The answer is always IT'S YOUR DECISION. Some may consider this to be unethical, however what is ethical and unethical where there are no rules? Many have tried PND and came out with huge losses while a few have actually made a profit.
If you feel you can spot the coin where PND will occur, then it's your benefit (once again at your win or loss).
ALWAYS REMEMBER: