Pump&Dump in the world of Cryptocurrencies: market manipulation - Avoid falling for this scam
First of all, a big greeting friends of Steem Alliance, I hope this year 20224 is very good for everyone, and that productivity and health are on your side.
Today I want to talk about an event that happened yesterday, and it is well known in the crypto world, at least for those of us who have some time here, but in which unfortunately many people fall, and it is that which they call Pump&Dump, what does this refer to, how does it happen?, this and more I will answer below.
It is important to understand this market movement, that in the end all price movements of an asset depend on liquidity, understood as the amount of money that exists in the market, either to buy or to sell an asset.
That is why, if there is a large flow of money for sale, if there is a large number of people selling a cryptocurrency (specifically for this case of a crypto) the price will most likely go down.
Conversely, if we have a large amount of people buying a cryptocurrency, most likely the price tends to go up. It is something basic of the market, and that is applicable to any asset, but for the case in question I will talk about the cryptocurrency market.
Let's define Pump&Dump
"Pump-and-dump is a manipulative scheme that attempts to boost the price of a stock or security through fake recommendations. These recommendations are based on false, misleading, or greatly exaggerated statements. The perpetrators of a pump-and-dump scheme already have an established position in the company's stock and will sell their positions after the hype has led to a higher share price." Source
In the concept used it can be noted, in the first instance, that it is a scam, since it is an exaggerated movement of the price of an asset, which even when they say stock or security, we can apply it in the same way to cryptocurrencies.
The issue is that prices rise precipitously, by the massive entry of capital, driven by lies, and once it reaches a high point, the price ends up plummeting by the equally massive sale of investors, who are usually those who made the false campaign to raise the price and take advantage of the opportunity to liquidate tokens at a very high price.
Let's see a clear example of this phenomenon
Yesterday, December 31, a very clear case of Pump&Dump occurred with the TRBcoin, we can see it clearly in the following image:
It must be taken into account that, being December 31, not many people were in the market, i.e., liquidity was low, which makes it much easier to manipulate a particular market. It is not the same to want to manipulate a market of 1 billion dollars than one of 100 thousand dollars, since you need less capital to be able to do it.
Being the end of the year, let's say that the conditions lent themselves to this. And as you can see, the currency in question, TRB, rose in a few hours from a price of $289 to $630, that is an increase of more than 200% in a short period of time.
Sure there were people who managed to make a huge profit from this, especially those who did the PUMP, those who created the environment for the price to go up, but there were also those who went in with a very high price and lost money when the price did the DOWN.
Scams are the order of the day, and this event known as Pump&Dump is a terrible manipulation of the markets that we must avoid, because the chances of losing are increased.
Conclusion
To enter any market it is important to know everything about it, to avoid falling into situations that lead us to lose money. In particular I know of a telegram group that is responsible for creating this type of situation, but I do not participate, because they do not use a recognized exchange, but one that is of low reputation, because it obviously lends itself to this type of activity.
Let's avoid exposing ourselves, it is a recommendation, because in trading it is always best to protect our capital, to avoid falling into situations that put us at a disadvantage and make us lose our money. I hope this post has been beneficial for you. Happy new year to all of you.
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This is a nice post you have shared on pump and dump scheme.
It is the most common form of scam and we should be alert to this.
Now Engage, Connect, and Inspire Each Other to Reach New heights.
Thank You.
Thank you very much for the verification.
A few days ago I was attentive to the launch of a cryptocurrency that was expected to rise a lot after the launch on the Mexc exchange, and what really happened was that the price collapsed. It lost 80% of its value 10 minutes after entering the market. that was crazy.
The coin is called Goon' it is a memecoin. but surely the creators of the currency did make good money
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Felicidades por ganar primer lugar #cotinahealth
Justo acabo de darme cuenta.
Muchas gracias por esta iniciativa y por el apoyo.
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