There are a lot of methods of earning money at the cryptocurrency market, and they often differ depending on the size of the participant’s investment portfolio. Large investors can afford dishonest methods of increasing their own capital, for example, by creating an artificial demand for a certain asset. In professional terminology this is called pumping. In this article we will consider the mechanism of this process. We’ll tell you how to keep your assets safe and not fall into the trap of manipulators.
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- The concept of pumping
- Pumpers’ working methods
- How to recognize a pump and not lose your money?
A cryptocurrency pump is the artificial inflation of its rate, carried out by buying a large number of coins, creating an agiotage among ordinary traders, while cryptocurrency dump is its unexpected sale at a peak of value and the rate collapse. This is an “excellent” option for earning for single large investors or a group of medium traders.
Manipulators often choose smaller and little-known coins with low market capitalization for these purposes. Bitcoin or any other coin from the top-10 can only be pumped by multimillionaires.
Pumps rarely happen during the general growing trend, since the main task of a pumper is to purchase assets at the lowest prices.
Ideal conditions for manipulation:
- a pretty new currency with a good news background and a good idea, which you can use;
- the coin value is below average;
- global downstream at the market.
Manipulators who earn on cryptocurrency pumps get as creative as humanly possible in order for their trick to work. The ways which they use to achieve artificial growth of an asset price are quite numerous. In our article we will consider only the main and the most common ones:
- One-time contribution. An asset rate skyrockets in a short period of time. Depending on the capitalization and the amount of the investment, this index can vary from 40% to 300%.
- Gradual “pumping” of coins. In this case, besides buying coins, manipulators create a positive news background. This is necessary to ensure that as many investors as possible believe in the natural growth. Long-term pumps can last several months, after that pumpers quickly sell off their assets, leaving investors with nothing.
- Using trading robots. This method of manipulation is very similar to the first one, but it is implemented through the use of special software. It is the shortest one in terms of time, as the market can quickly track the similarity of transactions. Anyway, the end of a pump is always the same, and it is not beneficial for ordinary investors.
How should ordinary investors who want to protect their portfolios behave? After all, information about pumps is not available in free access. If you don’t want to fall into the bait of manipulators, read the following list of recommendations:
- Have a cold mind and do not be guided by emotions. Always be skeptical of the sharp rate jumps. If there is no adequate fundamental reason for this, it is most likely a pampus.
- Do not count on “long-term” during the rapid growth. Not only organizers can earn on pumps, but for this you need to monitor the dynamics of price changes carefully and not try to catch the last train. If unnatural growth lasts for more than a week, do not buy this coin.
- Do not use bots for trading, as they are not able to adjust to manipulators.
- Do not be greedy. It is better to earn 50% than to wait and lose 80%.
- Learn to filter information, as not all sources can be trusted.
A cryptocurrency pump is a pretty frequent phenomenon at the market. It implies an artificial increase in the price of an asset, which is caused by the action of one person or a group of people with the aim of quick enrichment. If you want to earn at the cryptocurrency market, you must learn to recognize such phenomena.
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