Everything You Should Know About Crypto Pump and Dump Schemes
Cryptocurrencies are volatile. They’re susceptible to pump and dump schemes, which is why you need to know how these scams work. Crypto scams typically take place on a chat app like Telegram or Discord, with scammers sending out messages that urge people to buy a coin quickly before the price goes up even more. The message will also include a link where people can purchase the coin in question, which often leads them to a fake website instead of an exchange.
Keep reading to learn how you can avoid being taken advantage of by pump and dump schemes.
Crypto Pump and Dump Schemes Explained
Investing in cryptocurrency is a great way to make money, but it’s also an easy way to lose money. Many people get into crypto hoping that they’ll be able to make enough money off their investment for it to be worthwhile. Unfortunately, there are some shady groups out there who will stop at nothing to take your hard-earned cash and run away laughing all the while.
A crypto pump and dump scam is when a group of people coordinates to purchase a small amount of cryptocurrency, driving up the price. Once they’ve caused enough hype and interest in the coin, they’ll dump it all at once for an enormous profit. It’s like causing a mini-bubble in cryptocurrencies and cashing out before everyone else realizes what happened.
How To Avoid a Crypto Pump and Dump Scam
Do Your Research
The volatile nature of the cryptocurrency market is not only exciting for investors but also incredibly dangerous. Crypto pump and dump scams are becoming more common as crypto becomes more mainstream, so it’s important to understand how they work to avoid them. Crypto pumps and dumps are a type of fraud where scammers buy cryptocurrencies that have recently spiked in value (pump), then sell their coins at inflated prices on unsuspecting victims (dump).
If you trade based on chart analysis or signals on social media, you could be caught up in one of these schemes without realizing it. To protect yourself from this scam, first, do your research before following trading advice online. Look into who is giving the information and read reviews about them before making any investment decision.
Investigate the Source
In the world of cryptocurrency, it can be easy to get caught up in the hype surrounding a particular coin. For instance, if you had invested in Dogecoin when it was first released and early adopters were flooding Reddit with pictures of their newly acquired wealth from buying into the coin at pennies each, then you would have experienced a pump and dump. These types of events are common among cryptocurrencies because they usually depend on pure speculation for success.
If you don’t want to get caught up in a crypto pump and dump, it is important to check the people involved. For example, you can check how many coins they have available for sale on their main page. If they have very few coins for sale, this could indicate that you are looking at a group of individuals who are trying to artificially inflate the price of the coin so that they can sell all their coins at once.
Pump and dump scams are a type of market manipulation that can be very damaging to your wealth. If you’re not careful, pump and dumps could cause the value of cryptocurrencies like Bitcoin or Ethereum to plummet in just minutes. If you are looking to safely trade cryptocurrencies such as Bitcoin, visit bitcoin-code.live which uses robots to help regular people trade bitcoins and helps avoid common crypto pump and dump scams.