What is a crypto pump?

The mechanics of a crypto pump typically begin with a group of individuals or entities colluding to purchase a large quantity of a particular cryptocurrency. This sudden influx of buying pressure causes the price to rise rapidly, attracting the attention of unsuspecting traders.

As the price continues to climb, the colluding group spreads positive rumors and false information to further fuel the buying frenzy. This process creates a self-perpetuating cycle, where the rising price attracts more buyers, who in turn drive the price even higher.

Once the desired price target is reached, the colluding group abruptly sells off their holdings, flooding the market with selling pressure. This sudden sell-off causes the price to plummet, often resulting in significant losses for those who bought into the pump at higher prices.

Cryptocurrency pumps, colloquially known as "pump and dump" schemes, represent a form of market manipulation that capitalizes on the ignorance of less-informed traders and the inherent volatility of the cryptocurrency market.

These pumps involve a coordinated effort by individuals or groups to artificially inflate the price of a specific cryptocurrency for financial gain. The primary goal is to create a buying frenzy among unsuspecting investors, who are then left holding the bag when the price inevitably crashes.