Cryptocurrency is a trade. As a trade, there is a lot to it other than merely buying and selling cryptocurrencies. Understanding the basic concepts and also the pitfalls in the business will help you to make profitable trading.
Cryptocurrency trading is complex and it has a lot coming with it. Some can be trickish programs that can make one lose all you have laboured for just in one day.
Also, there are a lot of projects that are rather fraudulent than promoting. This is because there are a lot of cryptocurrency platforms out there, and this makes it difficult to know which to follow.
The purpose of this article is to help you familiarize yourself with the common activities in cryptocurrency trading that are to your detriment and how to build a strong wall around your coins to avoid losing them in a blink.
One of such activities that are rather fraudulent other than advantageous, is the cryptocurrency dump. One controversial thing about some of these experiences is that they might benefit you or appear to be beneficial, but a careless venture or embrace can lead to your ruin.
The idea behind the dump and pump
To be honest, dumps and pumps that occur in the world of cryptocurrency are mostly instigated by a group of individuals. That is to say, they are often man-made.
This usually occurs when there is an initial coin offering(ICO). A group of individuals that want to promote such a token, will now instigate a pump by talking investors into buying such a token.
The format and scenario of dump and pump
Dumps and pumps take the format of artificially increasing the price of cryptocurrency of any sort, by creating the impression that the value of a coin is high and encouraging traders to buy a cheap coin at a very high price.
The dump and pump instigators can be very systematic and professional leaving traders with no option than to buy. They make this convincing by publishing this on the internet, trading groups, social media platforms and also creating fake profiles of personalities in the cryptocurrency field just to inflate the price of a coin.
Defense mechanisms against cryptocurrency dump/pump
To know and apply this method simply means to know peace in cryptocurrency trading. Knowing these things gives you the opportunity of gaining even in the dump without having to lose anything.
If you do not want to hold what is worth less than you paid for, then you have to know these;
1. Study the market trend
The market trend simply means the form the cryptocurrency market has been going, the market capitalization, and the price of each coin should be known to you. Know what real experts predict as future price, and which coin is likely to pump.
A lot of scammers make use of new coins and initial coin offerings (ICO) to carry out their fraudulent pumps. So, to be on the safer side, Familiarize yourself with the market cap. So that any unusual pump especially with the ICO will be an alert to be careful as buying into such coins may result in losses.
2. Don't buy coins when they peak
One nasty mistake a lot of people make is to purchase coins when they have already peaked. Some people are ignorant of the fact that cryptocurrencies are volatile. This implies that a peak now will in no time result in a dump the other second.
If you must purchase any coin, buy them when they are rising and quickly sell-off when they are at peak. This is a simple way to maximize profit. Buying when a coin is at its peak is a great detriment, as the next that follows such a peak is a dump. Remember, "anything that goes up will eventually come down", in fact with crypto, it is, anything that goes up, will soon come down. So, be careful.
3. Ignore fear of missing out
This is another trickish strategy employed by the dump and pump manipulators. They strategically dish out unanimous information about a coin. Creating fake value, rush, and possibly a rise in price that may result in a rush.
This easily gets to traders because the manipulators gamble on your psychology since they know that the heartbeat of every trader is to purchase coins. So, telling about the potentials of a coin which happens to be untrue and talking many to buy will easily get your attention as you will be scared to miss out on such an opportunity.
If the publicity is usually on shit coins or ICOs, ignore it. In the actual sense, you are not missing out on anything.
FOMO can push some traders into selling off their good coins to get a coin that will shortly dump completely creating a loss of value and fortune.
4. Understand the different dump schemes
Understanding the strategies of these manipulators will keep you away from loss.
Most of the dump strategists usually send spamming emails and the scam activities are usually on social media. Most of the dump and pump news from these schemes cannot be seen on reputable news sites like; Daily Times, CNN, and world news. They tend to misinform the feeble minds who end up falling victims to these activities.
Before you consider any pump or dump predictions, be sure it's coming from the right scheme, structure, and personalities. There are professionals and influencers in the field who say and it comes to be, listen to them so that you will be guided on the actions to take.
One interesting thing is that you can utilize the dump and pump to your benefit and profit maximization.
To benefit from the dump and pump;
Carefully follow the token that has been mentioned many times by pros as a token with quick pump potentials.
Continue to follow the price on the market cap. To know when it rises
At this point, if you have it in stock, be ready to sell. On the other hand, if you are intending to buy, buy at the early stage of its rising.
When it peaks, sell off to make a huge profit.
Remember, on no account you should buy a token when it has already been pumped.
5. Study the structure
Understanding the nature and structure of cryptocurrencies gives a good defense.
Know the logic behind cryptocurrency dump or pump. When it comes to dump or pump predictions, some individuals are lords in the field, when they make predictions, it comes to pass.
One thing you should do is that there are manipulators who are out to make you lose so they profit. Their profiting only comes from the dump. They will therefore investigate fake pumps that might make some investors fall victims to the dump.
There are good communities that you should pay attention to in order not to fall victim to both the real and fake dumps and pumps. Reputable and legitimate communities like Reddit and Bitcoin.org
can see you through.
You've made a great point. I didn’t understand before how cryptocurrency dumping and pumping are organized. And when to collect it ??. Honestly I understand fairly well. When the price goes down, I should collect some. And the misconceptions I have are gone. I used to think if I collect some BCH but then what if they get ruined in some way ?? But reading your article has taken away my fear.