The Anatomy of a Pump – Dump Group

Pump&dump (P&D) schemes are a common occurrence ter the cryptocurrency world.

They most often toebijten te Telegram or Discord (talk programs) groups ter which several thousand people buy a specific shitcoin (a crypto token without a value or future) at the same time te an attempt to artificially inflate its value. This value increase is called the pump while the selling of this now expensive token to naive bystanders is the dump phase.

Ter this article, wij’ll take a look at the anatomy of one such smaller P&D group.

Group

Fresh groups are popping up daily, but they’re infrequently legit. Most often they’re actually outer rims of already established groups – a secondary layer more intended for the dumping phase.

Members of the core layer agree on a coin and inform the outer rim about it. Even inwards the core layer there are often several levels – for example, those who paid entry (averaging 1 – Ten BTC) generally get their information 5-6 seconds before others. That’s slew of time to buy the coin at a lower price. Others join te afterwards and only 10-30 seconds zometeen do the outer rims find out which coin wasgoed picked and go into xxx shopping.

Quality core layers accepting fresh members today are hard to find and expensive to join (north of 15 BTC), and the groups people join today are generally 2nd or third layer groups. The percentage of successful trades decreases spil the circle you join is further away from the center.

Organizers are always successful because they’re the ones who determine which coin is next and can buy it well te advance – sometimes days to hide their trail. The very next layer already has a lower chance of success. Despite the fact that they paid for access to information, technical difficulties can toebijten and since the information can’t take too long to reach the outer rims otherwise everything falls bovenmatig, a elementary glitch ter the internet connectivity or the webpagina ter question can be enough to miss the train. The next layer is even less successful than the one before it – at this point, it can already be demonstrable which coin is being pumped judging by the graphs, and sometimes thesis outer rims use such information to buy before those te internal circles do, thereby striking them to a better price. The situation keeps resolving until it reaches the outermost layers.

Phase 1: Announcement

How often the pumps toebijten depends on the group. There are some who pump several times vanaf day, and others who pump merienda vanaf week or merienda vanaf month even. The group wij’ve bot watching for this postbode is relatively fresh and does it merienda vanaf day on promedio.

Te phase 1, the time of the pump is announced, often with the help of a verbinding which leads to a countdown to accommodate people from different time zones.

The exchange on which the pump will toebijten is also selected. Tokens susceptible to P&D are uncommonly listed on reputable exchanges, so thesis schemes will usually toebijten on HitBTC, Cryptopia, Coinexchange, and similar smaller exchanges.

It’s significant to note that no one but the organizers knows which coin is going to be pumped.

Phase Two: Countdown and Preparations

Merienda the countdown commences, participants prepare their accounts by loading them up. The accounts are often loaded up only with enough funds to click “max” te the UI so the purchase goes through swifter at market value.

Reacting quickly is very significant so other browsers and programs are generally turned off and the internet connection is liberated up spil much spil possible (no torrents or streaming) to make response times quick. Technical problems can create bagholders.

Those most experienced have trading bots ready (scripts for programmatic purchasing without the need for a browser). Merienda the coin is known, they type ter its symbol and the bot takes overheen, instantaneously also setting up a limit sell order for 150% – 200% of the purchase price, all within a single 2nd.

Phase Trio: Pump

After the coin has bot picked, the organizers buy enough of the coin to take advantage of the price spike, but not so much spil to stir the price themselves. If they moved the market with their own buys, this would get them accused of a pre-pump, causing them to lose followers. Such a stir usually gets executed when the group is at its death throes and most participants have lost trust te the administrators. When only the most naive remain – those who are incapable to recognize pre-pumps – that’s when this last trick is executed to milk the members one last time.

After packing their bags, the admins release the coin’s information to the surplus.

Some use bots, some go manual, but everyone then explosions up on the same coin, making it more expensive.

Those who finished a purchase then budge into hype phase where all talk channels are spammed with the coin, urging bystanders to buy it spil well.

Phase Four: Dump

The purpose of this phase is to get guiltless bystanders to buy into the coin because of its rapid rise (which is, by now, visible on the graph).

Because of a rapid sell-off by the members who bought early, the dump lowers the price of the coin to its initial value, sometimes lower. Ter infrequent cases, the pump will actually permanently raise a coin’s price by 10-15%, depending on the coin.

Professional Bagholders

When the organizers buy a coin before telling everyone, that’s what’s called a pre-pump. For example, te the group wij were watching for this postbode, the OAX coin wasgoed announced with a pump commence due at 23:00. But if wij look at its graph, the pre-pump is visible:

The graph clearly shows the organizers having loaded up on the coin 20 minutes earlier. This permitted them to embark dumping on their group’s members instantaneously on embark time at 23:00. The reason they were able to stir the market by themselves wasgoed because this coin had a total trading volume of Two Eth on HitBTC, which meant even half an ether could budge the needle.

Many people simply don’t know that during a group’s pump phase the organizers are doing their own pump te the group itself te order to get the members to buy the coin from them.

If one of the members gets fortunate and sells it forward for even more, that member is successful and has good things to say about the group, bringing ter fresh members. Those who fail usually leave the group (so there is little to no negative terugkoppeling te such groups after a while), but only after begging and complaining about losses very very first:

Thesis participants are called professional bagholders because they inject the market with amounts they cannot afford to lose and only want a quick buck – no research, no effort, no thinking, not even watching the very very first 4-5 pumps to see what the group is like.

The vast majority of P&D groups you get invited ter by someone is of this type – a fraud designed with the express purpose of presenting the very very first pump spil successful and legit and whetting people’s appetites, and then using future pumps to milk the members dry. It is very effortless to make fresh groups – if you’re not the organizer, you’re expendable to the group.

Other P&D Types

Other than thesis P&D groups, there are other P&D methods out there. One of the more popular ones is celebrity endorsements/pumps. Spil celebs usually have many hundreds of thousands of followers, celebrities make good “professional bagholder factories”. For example, John McAfee (500k followers on Twitter) is very open to such schemes. Here’s how it works:

  • Organizers pick a coin and buy lots of it.
  • McAfee is contacted about it and paid 25 BTC (his current known toverfee).
  • McAfee also buys the coin, and then promotes it. The pump starts.
  • McAfee and the organizers dump the coin on the followers.

This is worth it only when the potential earnings are thicker than the expense – 25 BTC isn’t cheap after all. This is why this is usually done to long-term pumps (like Brink) or thicker coins (like SiaCoin or Stellar) which have enough of a market cap to not be downright obliterated by buy and sell orders from the organizers and McAfee alone. Schemes like thesis are very risky, but can be very profitable.

Conclusion

Ter the traditional investment world, P&D schemes are illegal. Because of a lack of regulation ter the cryptocurrency space, they’re still a very appealing way of earning a loterijlot of money quickly. There are various opinions about them – those who fail to use them decently and lose money usually label them spil immoral or criminal, while those who are ter the midst of them and find superb success usually invordering that they’re a superb way of clearing the “dumb money” out of the market, or an awareness mechanism about the crypto bubble, or something else.

Objectively, those schemes are no more immoral than gambling or lottery ads on TV and online – everything involving money has its risks and without a fine amount of research (technical investments), patience (HODL investment), or good contacts (P&D), there can be no profit.

Disclaimer: Bitfalls do not participate te P&D schemes other than ter a watch-only capacity. Wij are primarily long-term technical investors. The participation ter this group wasgoed for public research purposes only.

Related movie: How to Buy PACCOIN ter Cryptopia & How to Trade Paccoin ter Tamil


2 comments

  • There have bot a loterijlot of speculation about this exchange webpagina lately. just coin volume is puny and currency volumes are generally low. I do not believe it is scam.

  • Recently one of my coin on Cryptopia got disappeared, submitted a toegangsbewijs a week back and no response. There are many similar complains all overheen about this exchange.

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