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What is the Pump and Dump scheme?

Published: 4 июля 2024
2 min

What is the Pump and Dump scheme? What is the Pump and Dump scheme?
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Today we will tell you about one of the most slippery manipulations in the crypto market - Pump and Dump. What is it, how does it work and how not to fall for this bait? Read on!

Imagine: you suddenly notice that some coin is skyrocketing upwards. "Wow, that's lucky!" - you think and rush out to buy it. But you don't! A couple minutes later, the price suddenly drops and you're left with a handful of useless tokens. Sound familiar? This is the classic Pump and Dump.

How it works. It all starts with a group of "investors" (scammers) who agree to drive up the price of the coin. They buy it up en masse, creating the illusion of high demand.  

At this stage, they are joined by naive investors who see a "growing trend" and want to catch the outgoing train. But as soon as the price reaches the peak, the scammers quickly sell all their coins. The price drops instantly, leaving the rest of us out of luck.

How not to fall for this? Here are some tips:

  1. Don't succumb to FOMO. If something is rising fast and for no apparent reason, don't fly in!
  2. Don't believe promises of "easy money". There are no miracles in the crypto market.  
  3. Keep your head cold. Emotions are a trader's main enemy. Do not make decisions under the influence of panic or greed.

Pump and dump is a story about fast money, only without a happy ending for most of the participants. Be smart, trade wisely and don't give scammers a chance for easy money!

Share your stories in the comments if you have ever fallen for such schemes. We promise that we won't laugh (well, maybe just a little)!

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