Pump and Dump

"Pump and dump" is a market manipulation strategy often associated with the trading of financial assets, including cryptocurrencies. In this scheme, the perpetrators artificially inflate the price of an asset (the "pump") through misleading or false positive statements and hype.

Once the price has been driven up, they sell off their holdings at the higher price (the "dump"), causing a sharp decline in the asset's value. This leaves other investors who bought in during the inflated period with losses.

A "dump" in the context of cryptocurrencies refers to a sudden and significant decrease in the price of a coin or token. This decline is typically triggered by irregular or unexpected selling activity in the market. Dumping occurs when an individual or a group holding a substantial amount of coins or tokens sells them, often at the prevailing market price or even lower, with the intention of capitalizing on a recent price surge.

Dumps can also take place when a substantial number of existing investors swiftly sell their assets due to negative sentiment or other factors affecting market confidence. In essence, a dump is characterized by a rapid and substantial selling pressure that leads to a notable decline in the cryptocurrency's value.

Pump and dump schemes are generally considered illegal and are subject to regulatory scrutiny. Investors should exercise caution and conduct thorough research to avoid falling victim to such manipulative practices.