There are many possibilities in the crypto space, and one of the main factors that can occur to any crypto coin is the pump and dump. This is also possible in other markets, such as FOREX and stock exchanges. Pump and dump are never open to all traders and are kept a secret.

Pumps and dumps can be real at times, but they are often staged in order to catch other traders off guard or to book large profits. Just as in LUNA and FTX, where we saw a huge dump, this was due to bad news that caused these coins to crash. However, there are fake pumps and dumps where large investors and whales try to trap small traders.

ILLEGAL AND FAKE PUMP -AND-DUMP

This type of bogus pump and dump is prohibited in markets. Because there are no such Crypto regulations, no one is here to stop these bogus movements. Many social media groups that claim to be able to give more than 10% profit in a month do the same thing.

They gather a large number of traders in their groups while charging them fees and instruct them that they must follow every signal they provide. They select one of the coins and generate a signal, after which all members of the group buy the coin that is experiencing a pump. Similarly, they can short that coin in order to dump it quickly and pocket their profits.

Pump and dump plans are common in the cryptocurrency market, where a number of people work together to buy a sizable quantity of a particular cryptocurrency, or "pump," which causes its price to rise quickly or "pump." They will then quickly "dump" the cryptocurrency by selling it for more money, which will cause its price to drop significantly.

Social media sites, chat rooms, and messaging apps are frequently used by the "pumpers" to plan their strategies and advertise the coin they intend to pump. Additionally, they will employ strategies like fabricating news or disseminating false information to generate buzz about the coin and draw in more buyers.

The "pumpers" will quickly liquidate their own holdings after artificially inflating the price of the coin, which will result in a sharp decline in value. For those who purchased the coin at the inflated price, this results in sizable losses.

Most nations consider it to be unlawful and a form of fraud. Before making an investment in any cryptocurrency, it's crucial for investors to conduct their own research and be aware of these kinds of schemes.

Pump and dump schemes are nothing new and have been around for a while. They take place in other markets as well and are not exclusive to the cryptocurrency market. However, the decentralised nature of the cryptocurrency market and the absence of regulations make it simpler for these to occur.

It's important to remember that not all pumps are the result of pump and dump schemes; occasionally, a coin's price may rise as a result of actual news or developments. However, if the price of a coin suddenly and significantly rises without apparent cause, it might be a sign of a pump and dump scheme.

DO YOUR OWN RESEARCH AND DON'T JUST LISTEN TO THE HYPE

It's crucial to conduct your own research and resist the urge to believe everything you hear in order to safeguard yourself from falling for a pump and dump scheme. Look for reliable news and developments that may be the cause of the price increase, and be sceptical of promises of certain profits. Always be ready for the possibility of a price decrease, and never invest more than you can afford to lose.

Red flags like a coin with a low trading volume that suddenly increases, a sudden rise in social media activity, or a group claiming to have insider information should also be watched out for. These might indicate a possible pump and dump scheme.

Before making an investment in any cryptocurrency, it's critical for investors to conduct their own research and be aware of these kinds of schemes. It's crucial that regulators and exchanges take the necessary precautions to stop these schemes from occurring, such as tightening regulations and keeping an eye out for unusual activity.

I am relieved to learn that the government has enacted crypto regulations for the cryptocurrency, which is very encouraging. In addition, I am looking for some regulations within the cryptocurrency market to put a stop to these activities and protect traders and investors from further losses. Stopping such activities will strengthen the crypto market, which will benefit all crypto users.

I hope you find this post useful and informative. If you find the post useful, please reblog it so that it reaches as many people as possible and that they can benefit the most. Also, remember to upvote, which will help me financially and grow my account.

• NOTE: PICTURES ARE TAKEN FROM CANVA AND EDITED IN CANVA.
  SOURCE

DISCLAIMER

Please keep in mind that I am not a financial advisor. Never, ever take anything I say as financial advice. Conduct your own research. Before making any investment decisions, consult with a professional investment advisor! My posts are strictly for entertainment purposes!

Thank you!
Best Wishes.