What Does “Pump and Dump” Mean?
If you have recently gotten into cryptocurrency trading, you’ve probably came across the phrase “pump and dump” before. What does pump and dump mean?
Lets start off by saying that it basically means exactly what it sounds like, but its worth mentioning that it shouldnt be confused with the word “pump” on its own. The word “pump” on its own can be used with a totally different intent relative to having the added word “pump” to it.
When people refer to a pump and dump, they are ussually talking about pumping up the price of a cryptocurrency, then dumping(selling) the cryptocurrency at a high price.
How Do Pump and Dumps Work?
Lets just go over some basics…
First, lets categorize “pump & dumps” to consist within 2 separate major categories.
Micro Pump And Dump
Macro Pump And Dump
Lets go slightly into further detail as to why we’re separating the two major categories into “micro” and “macro.”
Category 1: Micro Pump and Dumps (Short Term)
There are people in the cryptocurrency trading world who gather up and form what are called “pump and dump groups.” Many pump and dump groups are extremely organized & knowledgeable of cryptocurrency trading.
These groups usually range from over 500-5000 people online at once and they are the ones in charge of performing micro pump and dumps.
These types of pump and dumps can be performed on any type of coin wether its considered to be a “shit coin” or a “legit coin” due to the fact that it is not necessarily caused by the legitimacy of the coin its self, but rather by the decisions of the group performing the action based on various factors.
Therefore, when it comes to micro pump and dumps, it can be done to both good and bad coins.
How Do Micro Pump and Dumps Work?
- Pump and dump group leaders arrange a weekly timed schedule for pumping and dumping cryptocurrencies.
- The schedule consists of a time and date of when a cryptocurrency will be pumped and dumped.
- Each pump and dump is short term usually lasting from just minutes to hours.
- Group leaders select the cryptocurrencies that will be pumped and dumped behind the scenes.
- Group members are not notified of which cryptocurrencies will be pumped and dumped until just minutes or seconds before the arranged times.
- Higher ranking group members recieve faster signals for which cryptocurrency will be pumped.
Category 2: Macro Pump and Dumps (Long Term)
A macro pump and dump is when a cryptocurrency is being pumped on a much larger and long term scale. In some cases, cryptocurrencies have been created with the initial intent of stealing money from with public by making false promises.
There are many cryptocurrencies out there that are considered to be “scam coins” with no true beneficial intent. Any coin that can be considered a “scam coin” would fall into the category of a macro pump and dump.
A macro pump and dump is extremely different(and worse) than a micro pump and dump due to the fact that the entire purpose of the coin is a fasle. Relative to a micro pump and dump that can be done on any coin even with great value.
Characteristics Of Macro Pump And Dumps
- Long term and much worse than micro pump and dumps.
- An entire cryptocurrency may be nothing but false promises, specifically created with the intent of stealing money from the public.
- Thousands of people can be manipulated into continuously investing.
- Losses can be detrimental to investors.
- The scammers get extremely rich.