Pump and dump

Pumping and dumping are common in economic markets in general, and cryptocurrencies are no exception. In fact, wherever there is a concept of supply and demand, we are dealing with this issue. In a high-risk digital currency market, people need to pay special attention to this issue before investing so that they do not suffer financial losses.

When it comes to pump and dump, we're generally dealing with two groups of people.

Pump process begins

The first group is people who artificially raise the price of bitcoin or other digital currencies by advertising and confirming and making unrealistic attacks on news and the market. In fact, these people buy the digital currency they want at the price floor, and at the right time, using their financial and news resources, they try to raise the price of that currency, and suddenly when the cryptocurrency reaches the target price, suddenly They sell it.

The start of the dump process

Naturally, when a large number of people start selling their currency suddenly, the market will fall sharply. From this point on, the dumping process begins, with a sharp drop in price. Here we come across the second category; People who have less experience and are afraid to lose the value of their assets and sell their currency as soon as possible. When a large volume of the foreign exchange market moves in this direction, the value of that currency will fall sharply.

Pumping and dumping

The point to keep in mind is that both the pumping process and the dumping process can take from a few minutes to a few hours to a few days or even months. Undoubtedly, in any economic market, there is the concept of pump and dump, and a smart actor must prepare himself for this situation.