pump & dump (P&D)
what means 'pump & dump'?
Pump & dump is a common method to manipulate low capitalized cryptocurrencies. There are two different kinds of P&D groups:
- Case 1 – Several investors or a whole community organizes itself and agree on buying a large amount of coins all at once. Greater demand increases the cryptocurrencies’ short-term value. Consequently the group is deciding to sell all stakes at once at a higher price and generate profits.
- Case 2– A small group or and individual is trying to increase a low capitalized cryptocurrency by spreading misinformation trying to increase its short-term value. Consequently the individual or group will sell its stakes as soon as price levels have been elevated.
Pump & dump groups are not recommendable as these are mostly fraudulent and only few participants will eventually make profits while the majority will have to take huge losses into account.