[SERIOUS] Pump & Dump schemes in crypto
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![[SERIOUS] Pump & Dump schemes in crypto](https://b.thumbs.redditmedia.com/pFGQKQJ4GtxZpemsQPFBUvTa55-pU8oQ8etVoQLx3Gk.jpg "[SERIOUS] Pump & Dump schemes in crypto") | Edit: Unfortunately as expected the DOGE community is hammering the post & comments with downvotes without even reading and understanding it's nothing negative about DOGE itself. Says a lot about the community tho... DISCLAIMER: Before it's raining downvotes from DOGE enthusiasts I want to clarify this post is only pointing out the manipulation that abuses the crypto. This is no financial advice & no negative post about DOGE. No hate for the Crypto itself. There are a lot of retail investors that fall for these schemes. I will talk about DOGE as an investment at the end of the post. What is a Pump & Dump scheme?
SIGNS FOR A Pump & Dump scheme in cryptoAs you can see in the charts above there are outstanding spikes when you compare DOGE x BTC. Everytime those spikes happen they usually lead to a dump after back or close to the level before closer to the BTC chart. But why are whales doing this ?It is highly illegal to do that in the stock market. The SEC and other stock market commissions are on high alert when institutions and market makers do that with penny stocks. However, in crypto it is harder for them to spot and therefore whales have an easier time to get away with it. People found guilty of running pump-and-dump schemes are subject to heavy fines & potential jail. And how are they doing it?It is pretty simple. Imagine you are a whale with $100 million liquid in USDT. You buy the entire DOGE offered on the market on news ( popular recent example is Twitter ). The volume on DOGE is generally low for being an alt coin. So the price you pay to fill all orders and push the price up +10-20% isn't that high compared to BTC or ETH for example. The Pump happens and it attracts retail investors but also other whales that jump on the train. The price is pushing upwards - further and further. Take a look at the volume. You can clearly see the biggest volume by far hits when it already reached the peak. That is exaclty when those whales cash out the bought DOGE. The difference is the $100 Million they paid to push up the price can now be sold in the higher range without pushing down the price equal amount. Therefore they profit out of the higher volume / liquidity. If just 5-10% more liquidity was added at peak they already profit $5-10 million. How can I avoid it or profit out of this?The best way to avoid it is comparing the price movement with Bitcoin and ask yourself : Are the news really worth the pump? A recent example of Twitter using DOGE as a payment were just rumors. Elon Musk might have a plan to add the payment option but that might take a long time. A lot can happen in the crypto world until then. ( just looking at FTX drama for example )Usually what bigger investors do is ride the wave. Either spot the price movement early when whales start pumping on the news or short the peak. ( I do not recommend shorting unless you know what you are doing. Shorting is way harder then long trading with less potential ROI. ) This is the price range of the recent DOGE pump on twitter news: Doge pumping +162% in a couple days & dumping -52% days after. What about DOGE as investment? DOGE is a memecoin and ironically one of the best crypto surviving bear markets. Crypto investors expect DOGE to die every bear market since 2018 yet it's still alive and finds momentum all the time. Chances are high it will probably survive this bear market again and have a chance to increase in value next bullrun if Memecoins remain interesting for the crypto world. Doge inflates ~5 Million DOGE every year something to keep in mind for a long term investment. [link] [comments] |
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