Thursday, May 16, 2024

My Pump&Dump action adventure

User avatar of Dominik Nawracaj

Dominik Nawracaj

8 min read·16 Reads
My Pump&Dump action adventure

My Pump&Dump action adventure

As Bitcoin halving has approached and hearing all the profits for investors connected with that fact, I'm getting more excited about ways to earn extra money.
Being a very cautious investor and avoiding unnecessary losses, I'll buy some BTC and hold it until it raises twice or four times. But the recent price of Bitcoin is over 60k, and waiting until it rises X-times will last ages; I won't be able to live that long.
I'm sure there is a quicker way to become rich.
Speculation or gambling will be the answer.
Well, there are many crypto-casinos online and sports betting sites where you can try to multiply your cryptos, but, to be honest, I don't feel very strongly about it.
I'm not into playing on the leverage market, derivates, or more complicated stuff.
Then, of course, by accident, I found something called pump and dump signal groups, on my Telegram.
Why not try? I hope to enrich my wallet promptly.
And here is how I did it:
I got to a closed group that was shilling a particular token, saying that it was going to send it's price to the moon in a very short time.
So, as soon as I got the token ticker and its contract address, I got to site and watched the chart to see how the pump action was going to get into it at the right moment.
The project started with a market capitalization of $60,000.
I was waiting for a few hours, like a professional gambler, and then the thrilling moment arrived:
After two P&D actions, I was sure it was the bottom; at MC=16k$, I decided to put into it the whole 1$!
With a blush on my cheeks, I was watching the chart and waiting for rapid growth.
...but nothing like that had happened.
Why? The leader of P&D group promised to send the token MC of at least $100,000, so considering that, I could earn about five times of my entry cash.
It kept descending instead, and the market capitalization stopped at 6k, so I lost more than a half.
Well, I feel like a looser, and proably, this time I am one of them, but do I regret?
I will answer in the conclusion.
Firstly, let's take a closer look at what exactly a pump-and-dump scheme is.

Pump&dump action
A crypto pump-and-dump scheme is a type of market manipulation scheme in which offenders generate or get huge numbers of an altcoin, promote it to falsely inflate (pump) the token price, and then cash out by selling them to unwary investors.

When criminals dump their tokens, the supply grows while the price falls. Because many of these assets have little to no worth, their values will not rebound after the fraudsters sell their holdings. In other words, honest investors are left with almost worthless tokens while "pumpers" get their profits.

Pre-Launch Phase
A pump-and-dump scheme is based on the marketing of a relatively worthless token. It's all about the hype—the greater it is, the more investors buy-in, which fills the fraudsters' coffers.
They generally create this FOMO sensation via platforms such as X (previously Twitter), Discord, and Telegram. Scammers will attack wherever they find misinformed individuals to target.
Pump and dumpers use strategies like allowlists and pre-sales to establish a base of early customers.
An allowlist, often known as a whitelist, grants specific individuals early access and typically extra rights. Unfortunately, fraudsters exploit them to create a sense of exclusivity and make you feel unique. They pitch you on a one-of-a-kind opportunity to invest before anybody else.
If you're on the allowlist, you can usually purchase a coin or token before the general public in a pre-sale. You may also earn a discount, persuading you to pursue the project further. However, things only get worse from there.

Before and after the launch, the scammers use shillers to attract additional prospective victims to the initiative. Crypto shilling is the practice of pushing a token or currency, typically by someone with a large social media following, reputation, and authority, to increase its perceived worth.
The shillers employ FOMO to convey a sense of urgency and excitement. 'You did not make the allowlist and hence missed the pre-sale. 'Well, here's your last chance to get in at the ground floor and make millions later,' they will tell you. As a result of believing the bogus buzz, the victims end up shilling the token for the scammers.

The next phase is the pump. This suggests that the list of destined victims has already purchased the asset, causing its price to soar. Those who did not participate in the pre-sale frequently feel they missed out. But therein lies the fallacy. As additional latecomer investors buy in at greater prices, the price rises. And, sadly, it is exactly what the fraudsters intend.

When the token price reaches a level that the fraudsters believe is profitable, they coordinate and sell their holdings at the same time. This big sell-off pushes the token's supply well beyond its demand, causing the price to plummet. This produces fear among investors, who rush to sell. However, for them, it is already too late; the tokens have no value. All of the token's liquidity has been depleted, leaving the fraudsters with a large profit and the unlucky investors with worthless digital assets that they cannot sell.

How to spot pump and dump action
Figuring out when a certain cryptocurrency pumping will begin is not only a means to protect yourself from unwanted expenditures but also a way to generate money. Large-scale pumps cannot start spontaneously since they are nearly always the result of well-planned and coordinated acts by multiple (tens, hundreds) people. They require a lot of money for large pumps, especially if they intend to raise any more or less well-known currencies.
Here are some indicators of an inflated currency that can help you avoid getting stuck with your investments:

  • Publication of numerous documents on various topics and resources related to any currency. Articles of this nature occasionally emerge in official media, which are trusted by thousands of people.

  • Shifting attention to any cryptocurrency with the assistance of numerous newsbreaks is one of the tactics that pumpers utilize for significant investments in the future (read catastrophic) transaction;

  • Typically, before this type of news emerges on the network, someone purchases large amounts of this specific digital currency.

Strangely, the instigators of such agreements are attempting to impose limitations on digital money purchases, either by bots or personal actions, in order to manipulate currency rates.

  • A trade pump may also be identified if there is a sudden increase in the demand for a coin on numerous forums and chat rooms. It might be difficult to tell if this is authentic or fraudulent information. You may, however, accomplish it with diligence.

Because of the absence of regulation in the cryptocurrency industry, they are particularly appealing in terms of rapid and cheap profits. Opinions are divided into two groups: those who have lost money are stigmatized, calling this plan unethical and illegal, while those closer to the core typically believe that it is a good approach to rid the market of "fools' money" and enhance investor knowledge of crypto-bubbles.
Do I regret my loss? Of course I do; at nearby local shop, I can buy a can of good beer for $1, but, on the other hand, I gained a piece of experience, which I value a lot more.

I hope you enjoyed this post.
thanks for stopping by.


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