Starting to work in the cryptocurrency market, the investor hears about Pump & Dump – the scheme with which the major players “cut hamsters” (read, they earn on ordinary traders). However, later the earnings on the pumping cryptocurrency begin to attract many past inexperienced investors, who previously came across the tricks of experienced players. However, is it real? How much do you need to invest in the pumping and how much profit can you expect? We will describe in this article!
The pumpers artificially turn up the price of the chosen cryptocurrency in order to sell their own assets at a profit. They create an artificial stir around the coin.
For example, pumper buys 100 thousand coins, which now cost one dollar. If the coin is not top, such a purchase will already raise its value. However, a pumper can further boost its growth. For this purpose, he uses informational channels (real or fake) and conducts propaganda works among a wide range of users.
The more investors believe in the success of cryptocurrency and buy “growing” coins, the higher their price will raise. The greater will be the profit of a pumper, who at the right time will begin to drain.
For example, pumper will wait until the price rises to 10 dollars and sells its 100 thousand coins at a new price, which will provoke a sharp drop in the exchange rate. He will earn almost a million dollars dirty, but ordinary investors (they are also “hamsters”) will remain with a mountain of cheap coins.
Theoretically, you can pump any cryptocurrency. However, artificially pumping Bitcoin and top Altcoins is very difficult. You will have to invest at least several million dollars in the purchase of coins to provoke a necessary jump in the course. There is no guarantee that the pump will succeed. After all, top cryptocurrencies are a market with multi-billion capitalization and high competition.
It is very convenient to pump cryptocurrency with a positive news background. Most often, pumpers choose coins that everyone has forgotten about (or did not really know), but who are trying to get into the market.
A good option is a little-known cryptocurrency with an interesting idea, which should soon appear in the listing of the top stock exchange, conclude a contract with a well-known company, light up in a popular project, and so on.
A huge number of users, a large selection of trading pairs and the presence in the listing of a large number of new cryptocurrencies made them very convenient platforms for pampers. However, if Yobit remains so until now, then Bittrex has begun active work against Pump & Dump and in every possible way stops the work of pumpers.
The most obvious and profitable way to make money on the pumping is to head it yourself. According to experts, with the growth rate of “inflated” cryptocurrency by only 40 to 50%, the net profit of the organizer of pumping is 10%.
However, pumpers manage to achieve a price increase of 200% or more. Their profit is already 50% in this case. This is a solid figure, especially when you consider that hundreds of thousands of dollars are invested in the pumping. This is money out of the air, which can be earned in just a few minutes (this is how much the short-term pumping lasts most often).
The first option is suitable only for those sharks of the cryptocurrency world who can afford to pour a few tens or even hundreds of thousands of dollars into the desired coin. According to experts, the minimum entry threshold for a single pumping of non-top cryptocurrencies is 15 thousand dollars.
The organizer of pumping is strongly associated with fraud, in the minds of the majority of participants in the cryptocurrency community. However, one thing is to start Pump & Dump and quite another is to successfully catch the pumping wave. In addition, it is much easier.
There are several options for earnings. An investor can join the pumping group or enter the pump independently. Let’s consider both scenarios.
There are a lot of such groups today and most of them are concentrated in the Telegram. Here are just a few famous names: High Speed Crypto Signal and Pump (2 thousand participants), The Great Pump (almost 3 thousand), PumpKing Community (about 18 thousand), Pump Notifier (almost 20 thousand).
The organizers of the pumping groups are most interested in their own earnings and are always in more favorable conditions than ordinary participants. They know in advance when the pumping will begin (after all, they plan it themselves), but they can inform the members of the group about it at the last moment, even up to a few minutes before buying coins.
However, members of the group are faced with problems already at the stage of entering the pump. A huge queue is created when thousands of people burst into the stock exchange to buy the same cryptocurrency. The exchange may not have time to process the dramatically increased number of transactions. As a result, many members of the group simply do not have time to enter the pump.
The situation is even worse with the dump. Due to the same queue, most participants in the pump may not have time to sell assets at a peak price. Moreover, they don’t know exactly when the discharge will begin, so they orient themselves in a situation much worse than the organizers.
Having traced these signals, an experienced trader can predict a pumping and have time to enter it from the beginning of the first wave (when pumpers or pumping groups start buying cryptocurrency).
However, it is rather difficult to notice and react to these signals in time. We will have to constantly monitor market schedules of many cryptocurrencies. However, there are alternatives
Experts advise to merge into the pumping at the beginning of the first or second wave (when ordinary investors enter into the game).
After the first wave of pumping, as a rule, a technical rollback of the price by 5–10% occurs. Many investors are afraid that the recession has begun and are merging their assets. Pumpers use this to buy coins to the next jump. Therefore, to sell coins during this period is not necessary.
It is better to wait for the second wave and place orders for sale when the first maximum is reached. Often the second wave is higher than the first, but experts advise not to risk staying in the game. After all, no one, except the organizers of the pumping, knows when the second wave will go into recession.
There are two main components of successful earnings at the pumping site – the presence of reliable signals about Pump & Dump and the ability to correctly analyze the current situation on the market.
Therefore, pumping is not suitable for beginners who have never worked with cryptocurrencies before. This is a risky way of earning, which can bring profit only to experienced traders, if they act as carefully as possible.