It's been the norm these days seeing a relatively obscure cryptocurrency jump up in price for no apparent reason at all. There wasn't any new development, any news, and no announcements.
It just "exploded in price"
For example,
Today May 21, 2017, Bitbean (BITB) exploded in price (up 168%) for no apparent reason at all.
Looking at the charts, we can see this:
This is where the "Pump and Dump" term comes in.
Since the cryptocurrency world is still at its infancy (Bitcoin first started less than a decade ago, Ethereum is about 3 years old), the exchanges are highly unregulated and these kinds of practices are rampant.
So, how can we profit from these events? Because believe me, people make a LOT of money during these short periods of time.
First, we need to look for these 5 signs for a possible price pump.
1. Find a relatively stable priced alt-coin, that hasn't moved significantly over the last month or so
- For this example, we'll continue with Bitbean (BITB)
2. Look the volume of the coins being traded, the higher the volume, the better
3. Look for massive "Buy walls" on those coins, it is an indicator that a "whale(s)" is slowly accumulating the said asset.
4. Enter your position, aka "ride the whale"
5. Sit back and wait for the whale to jump out of the water
- You can also watch the Troll Box on Poloniex as new speculators throw in their money to try and catch the ride. I personally do this for fun.
5. Take out your profit before the whale crashes back down the market
This is the hardest step to execute. When your stock is rising, you believe it will go up forever. You will fantasize about all the money you are going to make with this trade. Then the next thing you know, the whale already has started taking profits before you and your profits are cut in half within minutes.
The rule is: Don't get too greedy, take your profits and get out
Rinse and Repeat
From this trade, if you put in $1000 (0.55 BTC) a week ago, 1 BITB = 0.00000017 BTC
Today: 1 BITB = 0.00000165 BTC (24-hour high)
9.7X increase from a week ago = 0.55 BTC x 9.7 = 5.389 BTC X $2078 (/BTC)
= $11,198.111
I say that's a pretty nice profit just by sitting back drinking my tea.
What do you think? What's your strategy for earning a nice profit on cryptocurrencies?
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