When investing, study the risks first because investment is not about profit or loss.
Moreover, you often hear the term coin pump in the crypto trading industry. Automatically, you have to be more careful when making decisions in transactions.
Because coin pumps can be risky, investment decisions can use the DCA (Dollar Cost Averaging) strategy.
DCA (Dollar Cost Averaging) is a way to invest identical income every week or every month.
Of course, this strategy helps us to be disciplined in buying investment assets.
What is Coin Pump?
Coin pump is buying coins or digital assets that are on the rise with positive news sentiment. The word pump means to buy.
This cycle can take place relatively quickly, even in minutes.
The term pumping indicates buying a digital asset in large quantities to drive demand.
When the price of a digital asset rises, investors should sell the crypto asset.
How Coin Pumps Work
The way these coin pump works is done for days or even weeks.
Investors started to spread anxiety when the number of coins collected was large.
The way to do this is by spreading the anxiety by saying that the price of the coin or digital asset being collected is rising.
Beginners with little capital are usually FOMO with this, so they are interested in buying coins too.
It would be better for beginners to always diversify in the crypto market to reduce risk.
Coins that were previously difficult to find are easier to find, so the price is getting lower and lower.
What are the advantages of a Coin Pump?
The profit from the coin pump will only be felt by scammers who manage to outwit and inflate the price against the market price.
Investors who are sensitive to this scheme might also benefit.
The profit obtained is also little when compared to the scammers.
As previously explained, scammers target less popular coins. That means scammers can buy many coins when the price is still meager.
When the coin has reached the limit, the price will go up, soaring from the price at the time of purchase. Of course, the benefits of the coin pump are obtained from a scheme that certain people can only enjoy.
Investors who initially join in can also benefit, although not as much as the main actors.
How to Recognize Coin pump?
The easiest way to recognize coin crypto pump and dump schemes is when unpopular coins, digital assets, and tokens suddenly experience a very high increase.
This increase occurred due to no apparent reason being the cause of the price increase.
Apart from that, several ways can be done in crypto pump and dump schemes, as follows:
1. Unclear investment offers
If an incoming message does not discuss investment, you must be careful.
Because scammers use many fraudulent ways to spread information.
Investments that are unconvincing or questionable usually reach various means, such as via email, comments on social media, and direct messages.
2. Watch out for red flags
Crypto investment, of course, must be that clear. The goal is not to be exposed to losses when investing.
Moreover, we, as investors, should be wary of red flags that are so clear.
How to Avoid the Coin Pump
The best way to avoid coin pumps is to do an in-depth analysis of coinmarketcap before deciding to buy coins or tokens when investing.
The meaning of pump and dump is that pump buys crypto assets, and dump sells the crypto assets that we have.
Coins that will pump usually have positive news regarding the digital asset price.
Pump-and-dump crypto often hurts investors because the price of existing crypto digital assets soars.
You should look for information or news so as not to be fooled by the market.
It should be noted the meaning of pump in trading is that pumping is used to indicate the purchase of a particular stock or commodity asset in large quantities to encourage demand for that asset.
The progress of the times and today’s technology should make collecting information on the crypto world easier, especially about coin pumps. Therefore, you must look for this information so you can stay invested.
The lack of information you get about the crypto world, one example of which is coin pumps, makes you more vulnerable to getting into dump and pump schemes.
Dump and pump is a crypto manipulation scheme that occurs when a coordinated group of crypto traders is targeted certain coins.
The primary purpose of dump and pump is to artificially or unnaturally increase the demand for coins.
The best way to avoid a coin pump is to do in-depth research before investing in crypto because investment must be carried out with the entire risk.
You don’t need to worry anymore about all these risks because you can learn more at Indodax Academy through articles and video channels broadcast on Indodax Youtube.
If you are interested in investing in crypto, let’s use the Indodax application and download it now.