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HOW TO KNOW EARLY ABOUT PUMP AND DUMP IN CRYPTO
*Pump and dump** schemes in crypto currency are manipulative tactics where a group inflates the price of a coin (the "pump") and then sells off at a high (the "dump"), leaving others with losses. Spotting these schemes early can help you avoid costly mistakes.
Here’s how you can identify a potential **pump and dump**:
1. Sudden and Unexplained Price Spikes**
* A small or unknown coin suddenly shoots up in price (e.g., 100%+ in minutes or hours).
* No real news, partnership, or development justifies the move.
**Check: ** Use websites like Coin Market Cap or Coin Gecko to analyze price history.
2. Aggressive Promotion on Social Media or Telegram
* Influencers, Telegram/Discord groups, or Twitter/X users hype the coin with phrases like:
* “100x soon!”
* “Don’t miss out!”
* “This is the next Bitcoin!”
**Red flag:** If multiple low-reputation accounts push the same coin aggressively in a short period.
3. Low Market Cap & Low Liquidity
* Easier to manipulate prices.
* A market cap under \$10M and very thin order books can be signs.
**Check: ** Look at volume and liquidity metrics on exchanges.
4. Repeating Chart Patterns (Pump-Dump Cycles)
* Coin shows frequent spikes and dumps over short periods (1–3 days).
* Look at the 1D or 1H chart to spot this volatility.
5. Whale Wallet Activity
* Large wallets buying big amounts before the price surge.
* They often sell right after pumping it.
**Tool: ** Use blockchain explorers (like Etherscan or BscScan) or analytics tools like **Nansen**, **Arkham**, or **WhaleAlert**.
6. No Real Utility or Road map
* The project has no whitepaper, real product, or use-case.
* Team might be anonymous or hard to verify.
7. Quick Drop after Spike
* As soon as the coin peaks, it rapidly crashes.
* This is when dumpers (usually insiders or early promoters) cash out.