The Pump and Dump Process in the Cryptocurrency Market
The goal of this market is not technology but making money. Despite being labeled "good technology," "huge funding rounds," the cryptocurrency market actually operates based on trust and psychological cycles. In a downtrend, all technologies hit bottom, and Altcoin is just a financial game for the "big fish" to make huge profits.
Basic operational cycle:
1. Accumulation phase:
Big players accumulate at the bottom, where the price has been sideways for a long time.
The main source of supply comes from retail investors selling in desperation.
2. Price push phase:
Big players do not push the price "to the ceiling" immediately but divide it into phases to create liquidity.
A light push creates FOMO (fear of missing out), attracting new buyers. Investors who bought at the bottom panic and take profits early, creating opportunities for the big players to accumulate more.
3. Peak formation phase:
The price continues to be pushed step by step, occasionally shaking to weed out impatient investors.
When the entire market is euphoric, accounts increase by 20-30% daily, people believe that prices will continue to rise forever.
4. Dumping phase:
Big players slowly offload when retail investors believe that all corrections are just "temporary."
When there are no more buying forces, the price begins to drop sharply, free-falling, and returning to the bottom, starting a new cycle.
Note: This cycle repeats in the order: BTC > ETH > top coins > junk coins. Participants need to stay alert, avoid FOMO, and manage emotions to avoid becoming "prey" for the big players.