What is a crypto pump?

A crypto pump is a type of market manipulation in which a group of people artificially inflate the price of a cryptocurrency by buying a large amount of it at the same time. This creates a false sense of demand and causes the price to rise. Once the price has reached a certain level, the pumpers sell their coins, causing the price to crash.

How do crypto pumps work?

Crypto pumps typically work in the following ways:

A group of people (the pumpers) identify a cryptocurrency that they believe is undervalued.

They buy a large amount of the cryptocurrency in secret.

They then start to promote the cryptocurrency on social media and other channels, creating hype and excitement.

This causes other people to buy the cryptocurrency, driving up the price.

Once the price has reached a certain level, the pumpers sell their coins, causing the price to crash.

How to spot a crypto pump

There are a few things you can look out for to spot a crypto pump:

Sudden increase in price and trading volume. A sudden and significant rise in a cryptocurrency's price is usually the first red flag pointing out that it may be a pump-and-dump scheme.

Lack of practical or genuine value. If a cryptocurrency has no real-world use case or value, it is more likely to be the target of a pump-and-dump scheme.

Excessive social media hype and promotion. If you see a lot of people promoting a cryptocurrency on social media, be wary. This could be a sign that a pump is underway.

Lack of transparency. If the developers of a cryptocurrency are not transparent about their plans or operations, it is more likely to be a scam.

What should beginners know about crypto pumps?

Crypto pumps are a risky investment strategy. Beginners should be aware of the following risks before participating in a crypto pump:

You could lose all of your money. If you buy a cryptocurrency that is being pumped, you could lose all of your money when the price crashes.

You could be scammed. Pump-and-dump schemes are often scams. The pumpers could disappear with your money after the price crashes.