Cryptocurrency Pitfall Guide: Identifying Signals for Pump and Dump of Altcoins

Are you often at a loss when playing with altcoins? Either you chase the high and it drops, or you get thrown off the bus during a washout. Here’s a practical and effective method for identifying pump and dump signals, which can help beginners avoid detours.

Three Key Signals Before a Pump

1. Volume and Price Rising Together

In a short period, the price breaks through previous highs, and the trading volume increases to over three times the usual amount, with large orders being executed quickly.

2. Sudden Surge in News Activity

Suddenly there are good news such as "technical breakthroughs" or "listed on major exchanges," and the discussion heat in communities and social platforms noticeably rises.

3. Whale Addresses Moving

Through on-chain data analysis, we find that large addresses continue to net buy, while exchanges show a significant trend of withdrawals exceeding deposits.

Key Points for Identifying a Washout

1. Reduced Volume Correction

The price corrects by 10%-20% but the trading volume significantly decreases, and it has not broken through key support levels (like the 50-day moving average).

2. Large Orders Acting

There are extremely large sell orders at the market but frequently canceled, increasing the concentration of chips, which often indicates that the major players are creating panic.

3. Indicator Divergence

The price reaches new lows but the RSI does not drop simultaneously, and MACD green bars shorten, indicating that a rebound may be imminent.

Practical Operational Tips

• During a Pump: Avoid blindly chasing highs, wait for a pullback to support levels before trying small positions, and set a stop loss of 3%-5%.

• During a Washout: When volume stabilizes, consider adding to positions; if it breaks through key support levels, decisively exit.

• Position Management: No single altcoin should exceed 5% of total assets, and total allocation in altcoins should not exceed 30%.

Risk Warning

The risks of altcoins are extremely high, and all signals may be manipulated by major players. It is recommended to allocate 90% of funds to mainstream coins and only use a small amount for altcoin trading. #美SEC推动加密创新监管 #鲍威尔发言 #美联储降息预期 $ETH $BTC $BNB