Pump and dump schemes have existed over centuries and have benefited several people. In the crypto world, this strategy is relatively new, but early adopters have leveraged it to make huge profits. So, what exactly are crypto pump and dump groups?
Typically, these groups inflate and deflate the value of their cryptocurrencies based on false and misleading information. Crypto pump and dump groups promote unknown coins on Telegram, Discord, and other channels by posting unverifiable signals and inaccurate information about a crypto-coin price.
When the price increases, it is called pumping. When it reaches a desirable level that the holder can start selling, it is called dumping. Briefly, the strategy is based on the deployment of misinformation to achieve a certain goal.
How Do Crypto Pump and Dump Groups Work?
These groups select an asset, particularly the one with a low market capitalization that costs not up to a dollar. Participants or organizers buy this digital coin in low volume to avoid arousing any attention. During the acquisition, the buyer or buyers devise a marketing strategy. This strategy launches a campaign that promises future yields. That way, people become interested in investing in the coin.
As people start purchasing the coin, the organizers join. The buying frenzy will force the price to go up. Others who haven’t invested will try to buy the coin, which further inflates the price. This is typically called the first pump stage. Sometimes, the initial investors sell their assets during this stage. Those who want bigger profits proceed to the second pump stage.
After the first stage, the planners will allow the price to decline to a reasonable level. They repeat the process, encouraging more traders to invest in the coin. Once the price reaches a peak level, they sell off their assets. This stage is more profitable than the first.
Is This Strategy Risky?
Because people profit from pumps and dumps doesn’t mean there aren’t risks involved. Many people have lost so much money using this strategy because of a lack of knowledge. Some groups are not legit and will make you lose money at the end of the day from buying coins.
For one, you need to verify the group you are joining. Some groups may claim to have an excellent strategy, but the reverse is the case. Some of the best crypto pump and dump groups are Mega Pump Group, Big Pump Signal, and Crypto Family Pumps. You should ensure you are ready to invest your money and time.
Although this strategy works well with crypto because it is unregulated, some people may consider it illegal and they could report anyone involved for engaging in illicit financial activity.
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