How manipulation works: pump and dump in the cryptocurrency space

The pump and dump phenomenon is one of the most common market manipulation schemes in the cryptocurrency industry. Essentially, it is a coordinated attempt to artificially inflate the value of an asset, whether it is a coin or NFT, attract naive participants, and then massively offload positions, leaving the others with losses.

Mechanism of Action: How the Spiral is Pumped Up

The beginning is always the same: insiders or early adopters accumulate significant volumes of the asset at low prices. Then, the information machine is launched — loud statements, fabricated news about supposed partnerships or technological breakthroughs spread on social media. The goal is the same: to create hype and convince the masses that the price is about to soar into the stratosphere.

When the wave of speculative interest picks up momentum, the price indeed rises rapidly. Newcomers and FOMO investors jump on the train, hoping to catch the moment. But this is the most dangerous moment — precisely when the charts look the most attractive, those who started this machine begin to unload their positions. A dump occurs: the price falls dramatically back to real levels, or even lower.

Who is left with losses

The main sufferers are those who entered at the end of the rise. They bought at inflated prices, believed the stories about huge potential, and now sit with losses. By the time they realize what happened, the price has already fallen by 50-90%, and there is practically nothing to sell.

Why does this keep working

The paradox is that despite the obviousness of this scheme, pump and dump does not disappear. Because every wave of new participants hopes “this time” to be among the winners, not the victims. Greed, haste, and lack of knowledge are the three pillars on which any manipulation stands.

How to protect yourself

The main rule is to conduct your own research (DYOR) before any investment. Study the project's fundamentals: developers, technology, real-world application. Avoid assets that are praised in unofficial groups and channels, where they immediately offer to buy “for pennies.”

Invest in projects with a transparent history, real product, and organic growth. Remember: quick profits often turn into quick losses. This is not a moral lesson, but simply market mathematics.