This is one of the most studied methods of market manipulation, when the price of an asset is artificially inflated, and then sharply collapses due to the fact that the organizers begin to sell it at the peak of its value in order to fix the maximum profit.
How to artificially inflate the price of an asset? To do this, fake cryptocurrency news is most often used, which is distributed through various channels - for example, on thematic forums, on Youtube channels or in groups on social networks. The goal of the organizers of the pump and dump is to lure traders with promises of fast and high returns in order to use their purchases for a lightning price rise. And then, when it reaches a certain level, abruptly start selling.
It would seem that what prevents traders who bought coins, succumbing to provocations, from also selling them at the top of the market? The problem is that they simply do not know where this peak is, they are afraid of missing out on profits, they believe assurances that they have not earned enough yet. Plus, the fall usually happens quickly and unexpectedly - many market participants, especially dummies in cryptocurrency, simply do not have time to navigate in an unexpectedly changed situation and make the right decision. For example, many people confuse a dump that has already begun with a simple correction and expect that after a while the price will go up again. Therefore, in crypto trading, you always need to be able to assess risks and fix not only losses, but also profits in time.
Here is one example of such a situation. There is a case when the price of the SLS coin was increased by 950%. Before the start of the pump, its price was 0.0046 BTC, and at the peak - 0.0438 BTC. However, as soon as the dump started, the price dropped again to 0.0059 BTC.
A quite natural question arises - is it possible to make money on pump and dump at all? Or is it in any case a guaranteed loss of money? The good news is that you can make money on pump and dump. And the bad news is that it is extremely difficult to recognize them on your own in time, especially without having the proper experience. And then special automated tools come to the rescue, which will help you catch the wave in time and get an impressive profit from the rental on it.
For example, inside the GRIN4 service there is a unique setting that allows you to track the pump and dump. That is, to correctly assess the situation, its potential and make appropriate decisions. It is this combination of factors that makes earnings on pump and dump real, allowing you to get the most out of the market situation.
Thus, pump and dump are rather risky market situations, which are quite difficult to use for your own good if you do not have special tools. However, technology does not stand still, and GRIN4 proves this by helping to tame such an unpredictable, but at the same time promising a great profit phenomenon.