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What is the coin pump mechanism, what are its results?

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Written by   9
6 months ago

The coin pump mechanism is a way to force any crypto coin to rise, it is a real "Market manipulation".
It promises high rewards but it can fail dramatically in some cases.

The mechanism is pretty simple and obvious, a large crowd of people (1000 persons or more) agree on buying a large amount of a specific coin from a specific exchange.
The result of this stream of buys of a single coin in a relatively short time frame, is that the price spikes up and the more it keeps happening the more high the spike is gonna be.
Then the crowd agree on selling the amount of coins and the coin price peaks down again.
This method usually targets coins that worth very little so that large amounts can be bought and the manipulation is more effective.

No, if you are wondering, it can't happen on bitcoincash (actually it can but who has so much money?.

The results of this are that a large crowd of people played with a coin and a specific exchange, ending in most of cases, to spoil the exchange finances.
If a lot of people buys Xcoin at 5 cents and sells it back at 50 cents, right before that it settles down again, the only result will be that the exchange service would have lost funds and the Xcoin price will be unchanged or overall will not resent of the experience.

Don't think you can do it freely with your friends on any exchange, remember that an exchange can deny you any operation and they can even ban your account, not even letting you take your "legit" money (the one that you had before you tried to scam them).

These crowds meet and make decisions on places like telegram channels or subreddits, where, i assure you, most of the gains will go to the owners of the channels/subreddits because they will sell the Xcoins before you. In this way they have their sure income and you may end up selling too late or you will have your conversion denied due to a momentary flood of the platform.

Recently everybody saw this similar mechanism happening on Dogecoin or GameStop stocks.
Dogecoin pump didn't finish yet because the phenomena is driven from a meme (that is still spreading) and not from an agreement happened in a crowd of people.
If you observe the gamestop stocks, you will see the clear spike up and then the settle down.

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Suggestions and criticisms are welcome!

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Avatar for Treater98
Written by   9
6 months ago
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