What is pump and dump in crypto and how does it work?
Pump and dumps are coordinated manipulation of the value of a commodity for a quick rise followed by a sharp drop in the asset’s value. As the name implies, the ‘Pump’ describes a sharp price growth, while the ‘dump’ describes the following sharp drop.
Pump and Dump is a generic term, with its application cutting across every investment space. However, it has seen more relevance in digital investment spaces. Such practices are easier to effect in environments like these. Such assets include stocks and shares, precious metals, and digital currencies like Bitcoin. This article focuses on Pump and Dumps in the crypto space and how this applies to the everyday trader. First, what is pump and Dump in crypto?
What is Pump and Dump in Crypto?
Cryptocurrencies are known for their volatility. But sometimes, this volatility is influenced by artificial causes and could be followed by a sharp drop. The basic concept is sustained, but cryptocurrencies are involved this time. Pump and Dump in crypto is a common concept, for assets with low liquidity, this is even more common. Crypto pumps and dumps are coordinated and targeted towards a pre-selected crypto asset. The common goal here is a quick profit for the perpetrators. Here’s how it works
