Probably everyone who has spent at least some time in the crypto market has heard of pump and dump schemes. I’ve been following the market for a long time and want to share why this is truly a serious problem that needs to be understood.

First, let’s figure out what’s really happening. Pump is when a group of coordinated people start buying up an asset en masse, creating the illusion of demand. The price skyrockets in a short period, attracting newcomers who see green candles and think they’ve missed the rocket. But in reality, it’s just artificially inflated demand.

Then comes the second part — the dump. The same manipulators start selling off the assets at inflated prices. The price plummets, newbies panic and start selling at a loss, and the scheme is complete. Insiders take the money, and everyone else is left with nothing.

How does this actually work in practice? Usually, it all begins in closed chats and groups. There, they coordinate actions, spread information, sometimes outright disinformation or fake news. Sometimes, a loud post from an influential account is enough to trigger a wave of FOMO among retail investors. Then it takes very little time for the price to shoot up and down.

What does this bring to the market? Nothing good. Volatility skyrockets, people lose trust in assets, regulators start investigating. But most importantly, investors who are unaware of these schemes lose real money. And it’s not just small amounts — we’re talking about significant losses.

How to protect yourself? First — don’t believe everything at face value. Check information from different sources, look at trading volumes, analyze fundamental indicators of the asset. Second — don’t enter a position just because everyone around is talking about a rise. Third — be cautious with recommendations from dubious sources, especially if they promise quick money.

Overall, the main rule is simple: if something looks too good to be true, it probably is. Pumping is not investing, it’s a trap. Be careful, do your own research, and don’t let emotions control your decisions in the market.