Traditional chart studies can help traders spot pump and dumps. Generally speaking, “if a price pump is not supported by new material information, then it would most likely be happening in the context of a market price manipulation,” Renno said. ![]() This is the classic “pump-and-dump” scam prevalent in the cryptocurrency space. Deceptive and unregulated market makers (ie whales) can create “bull taps”, Renno said, which lure buyers into an overpriced market before the market makers dump high volumes of tokens, thus bringing the tokens’ value down to pre-pump levels. Pumps that are not supported by a sufficient fundamental catalyst should be treated with suspicion, he said. Yves Renno, head of trading at the cryptocurrency service provider Wirex, also believes that pumps are not indicative of a healthy market, and “are very difficult to predict.” Ross Thompson, an accountancy and finance lecturer at Arden University in Coventry, in the UK, likened these forums to old-school telesales offices “crammed with unscrupulous brokers identifying and cultivating their marks”.Īt the more sinister end of the spectrum, “faceless fraudsters spread fake news and bucketloads of hype on social media to provoke investor interest in worthless cryptocurrency,” Arden said. Pumps are often orchestrated via online forums, with Telegram and Reddit being two of the most popular platforms. But they are often an indication of illicit market manipulation, made possible by a comparative lack of regulation and accountability in the arena. The events of this timeline are a prime example of how arbitrary, unpredictable factors can impact the altcoin markets, instigating dramatic price pumps and bull runs that can net investors huge sums in a matter of hours. The caveat being that these windows of opportunity are usually small, as evidenced by DOGE's swift price reversals. But are there any clear-cut ways to learn how to spot if a crypto is about to pump? Can it even be done in the first place? The dark side of crypto pumpsĬrypto price pumps can be the result of genuine factors such as exchange listings, product launches and burn schedules. Once again, DOGE pumped, this time over 20%. Twitter initially pushed back against the hostile takeover, before seemingly coming to an agreement with Musk on 25 April. The excitement was just getting started, as Musk proceeded to make a bid for the whole of Twitter in what was dubbed his “ $43bn Tweet” on 14 April. Swift reversals quickly followed DOGE’s short-term pumps – Photo: While it was no comparison to the manifold moonshots witnessed throughout 2021, the token saw a 16% bull run on the day of the Tesla chief’s Tweet. But coupled with news of his 9.2% stake in the social media platform, the comment had far-reaching consequences for Musk’s meme token of choice, Dogecoin (DOGE). ![]() How can you tell which cryptocurrency is going to leap in value next? It may depend on whose Twitter feeds you follow. “Do you want an edit button?” read Elon Musk’s seemingly innocuous tweet on 5 April 2022.
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