How Bitcoin Pumps and Dumps Work
tonylondon (57)
in #bitcoin • 4 years ago

First of all pumps and dumps are illegal in the market hence you as a Bitcoin user should not expect deferral agencies to protect you. This brief overview looks into how Bitcoin pumps and dumps work and how you can make money of it but remember that is very risky.

Patterns

Bitcoin pump and dumps work in a very simple yet straightforward manner. Pump and Dump schemes comprise of two groups of people. The first group is players who play by artificially increasing the price of the Bitcoin by endorsing or promoting it. This category of individuals spends their time finding cheap coins to purchase then wait for when they are ready for dumping and build a buzz about the coins. The process of finding and buying cheap coins can take as quick as minutes or as long as hours or even days.

The people selling buzz creating momentum for the coins leading to an increase in trading volume as the value of the coins gradually increase. One interesting aspect of the process is that you are both the pump as well as the dumper. When the coins hit the price, you desire you can sell your coins. Some people tend to panic sell and end up dumping their coins for purchase returning the price of the coins to average. The most important step is to distinguish a coin that is being primed for a dump from one that is being primed for a pump. The pump and bump process creates buying patterns whereby as the price goes up and down each time a player buys thereby loading up on the cheap coins.

When players purchase coins, they tend to engage in the forums and chat boxes to share with others the coin of their choice. These players will regularly use multiple accounts and other players usually help them in making it look more real. This leads to the coin being talked up creating a buzz causing people to get interested and purchase the coins- ultimately creating the pumping process. When people start to buy in huge numbers, the price goes up fueling the buzz even further.