Crypto coins that get pumped often
But perhaps analysing the biggest recent risers can shed some light on the situation. Could this have been predicted? A definite fundamental catalyst coincided with this strong rally: On 19 April, Stepn announced a business partnership with the multinational sports company ASICS, prompting substantial enthusiasm for the innovative cryptocurrency. Taking these strong rallies at face value in what has been an overall sideways or even bearish market the Fear and Greed Index currently points to Extreme Fear , there is clear evidence that fundamental catalysts are playing a central role in crypto price movements.
The challenge for investors looking to jump in pre-pump is determining if and when major announcements are in the pipeline, and buying in accordingly. Keeping your finger on the pulse of market trends and developments, and closely following online discussions, can go a long way. How to know which crypto will pump: key takeaways If learning how to know which crypto will pump was easy, everyone would be doing it.
Unfortunately, the volatile and often arbitrary nature of the crypto markets makes this a difficult task. Additionally, the prevalence of pump-and-dump schemes means that substantial losses can be sustained should you fail to exit within a small window of opportunity. However, sentiment among traders suggests that fundamental catalysts have a greater impact on price action in the cryptocurrency space compared to the stock market. Traders with their fingers on the pulse of industry trends, backed up with an understanding of technical analysis, can likely find more rewarding entry positions than those blindly stabbing in the dark and hoping for an instant payoff.
At the end of the day, cryptocurrencies are some of the most volatile assets you can invest in, and few have managed to develop a foolproof way of safely investing. For budding crypto traders, Currency. FAQs What is a pump-and-dump scheme? A pump-and-dump occurs when malicious traders artificially pump the price of a cryptocurrency through misleading statements, online hype and flash loan attacks. How crypto pump works? Malicious pump-and-dumps are orchestrated over social media sites, with Reddit and Telegram being popular choices.
Traders can either create their own token with the intent of pumping it, or latch onto easily manipulated small-cap tokens. After generating hype though misleading statements, articles and flash loan attacks, perpetrators dispose of their holdings for a profit while flatlining the value of the cryptocurrency. Cryptocurrencies can also pump because of positive fundamental factors including project launches, exchange listings, roadmap milestones and major announcements. Are crypto pump-and-dumps illegal?
Unfortunately, the vast majority of crypto pump-and-dump schemes go unpunished. Some of them were rather obvious, while others were a bit more convoluted. Unfortunately, many of these scams focus on some of the most base of human fallacies: greed.
One of the most ridiculous scams came in the form of Squid Game. It was named after the hit Netflix show Squid Game. Almost everybody else lost money. Quite often, just paying attention to the name of a coin can show you how little it has to offer. There have been celebrities involved in pump and dump schemes, be they directly or hired as spokespeople. One example was EthereumMax, a coin that has no relation to Ethereum. Kim Kardashian and Floyd Mayweather were spokespeople for the coin before company executives dumped the coin for profit, leaving others who had bought the coin with massive losses.
Both celebrities are now being sued. While it is possible that you can still be part of a pump and dump scheme, taking a few basic steps can have a significant influence on whether or not you get stuck with one of these.
Much of this comes down to simple common sense, but some steps take a little more research. You can significantly increase the odds of avoiding scams by taking a few basic steps. What is the Investment Thesis of the Coin or Project? Before you put any money into a market, you must analyze the investment thesis. Analyze the Volume of Your Market One way to analyze a token is by looking at the volume traded.
If the price is rising rapidly, you need to see whether there is a large buy over the course of a week and then very thin volume pushing the token up. That scenario suggests that somebody got ahead of everybody else and is using hype to drive the market higher. Keep in mind that you must have the ability to exit a position. If the volume is thin, getting out of your position might be challenging if the market starts to turn around.
In this situation, you may find yourself holding onto something that has no value. Check for Media Coverage of the Coin or Project One way you can avoid a lot of trouble is to check for media coverage of the coin or the project you are looking to invest money into. Most projects will have a significant history of media coverage and company communication if they are legitimate. GitHub and Medium are some places where viable projects will have a considerable presence, so it is a good idea to look at what has recently been posted on these media portals.
In the past, there have been fraudsters buying up an old or defunct token, then running a pump and dump scheme. You must ensure that the token has a legitimate development team behind it and that there have been media releases recently. Who is behind on the token? When thinking about investing in a cryptocurrency, the people involved in the project can be every bit as important as the idea they are working on. Management matters in crypto, just as it does in a corporation listing its stock.
The management team can be one of the most important and influential parts of an investment thesis, so researching who is behind the project makes quite a bit of sense. Understand that people can lie about who is working on a project, so you must do actual research to find out who the major players are. As a general rule, most people behind viable projects come from the scientific or mathematical world, as it is relatively complex to create new crypto.
Keep in mind that there are over 20, crypto coins now, so you also need to understand whether or not the person has any real chance at creating something unique or valuable. Even the projects that are attempting to solve real problems have competition, so finding some unique advantage through the mental capital being expended. Risks of Investing in Pump-and-Dump Schemes The most common way people are brought into pump and dump schemes is through the prism of getting into a project very early, allowing for the generation of huge returns.
While this is theoretically true, most people who are investing in crypto forget to take into account that most companies and projects eventually fail. Capital invested in startups often disappears, which is why the occasional victory is so impressive from a return standpoint. This means that the investment disappears, and it becomes a total loss. When they do get into a company early, it will make up for most of the other losses.
Most crypto investors are trying to find the next Bitcoin, not focusing on the fact that thousands of other competitors have disappeared. Some venture capitalists have invested billions of dollars in Bitcoin, Amazon, and Uber. At one point, you could have bought Ethereum for mere pennies. You can say the same thing about Bitcoin. These dreams of making huge returns continue to sucker people into these pump-and-dump scams.
This is why these scams typically target unsophisticated investors, knowing that they will either not do the necessary research or not know how to do it.
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