Pump and dump is a type of market manipulation that involves inflating the price of a stock or a token/coin with the intent of immediately selling it for a huge profit. Pump and dump schemes usually start with increased buy activity and volume for the particular token/coin in order to give the illusion that a bull run is taking place. This scheme can involve social manipulation with news or rumors being spread to hype up a coin, a relaunch with excessive marketing , hype and promotion but with no fundamental improvement on the coin’s technology or underlying use case.

It is advised to be very careful as the value of a coin or token immediately drops after the initial pump. Be on the lookout for unusual activity like greatly increased volume and huge jumps in prices. Do not be drawn in by the possibility of huge profits since it is very hard to time when the dump will occur.

Pump and dump schemes are usually carried out on unpopular coins or tokens with low volume since the prices can be easily manipulated.

 

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