Pump-and-dump schemes as a means to manipulate the market

Pump-and-dump schemes as a means to manipulate the market — A message on how to spot them and avoid them.

The Aptos DeFi segment of the ecosystem has been on a steady rise lately. Unfortunately, it’s also attracted some bad actors who want to swindle people for financial gains. Today, we want to talk about one common trading tactic used to manipulate crypto markets whereby unsuspecting investors may get burned.

The tactic is pump-and-dump (P&D) schemes, a method that artificially and rapidly inflates the price of an asset and crashes shortly thereafter.

How it works:

A group of people coordinates a massive buy of a cryptocurrency, which subsequently sends the asset’s price through the roof, with all of them selling simultaneously at the highest possible price.

The result is a painful crash in the asset’s price, leaving investors with deep losses and questions surrounding the true intentions of the project.

How to play it safe

The first thing to keep in mind always is that any investment in cryptocurrencies carries an inherent risk.

The next thing we recommend everyone do is to DYOR, “do your own research.” It’s best to set some time aside to dig into a project’s specifics.

:black_small_square: Learning who is behind the project, their resources, how public they are, how transparent they are, how much experience they have, etc., would be a good place to start.

:black_small_square: Another area to pay attention to is the liquidity of the project’s coin on DEXs — the lower the liquidity, the easier it is to manipulate it.

Any project can fall victim to this kind of nefarious trading activity — even those with a stellar reputation and a trustworthy dev team.

The only thing that needs to happen is putting in a sum of money big enough to move the markets upward.

Naturally, projects with low funding are the most vulnerable to P&D attacks because even relatively small injections of capital are enough to disrupt these markets.

Be careful of P&D schemes.

Disclaimer:
This post does not report a specific incident.

My task is to bring the issue of P&Ds to your attention because they may appear in the development process of Aptos DeFi.

I wish prosperity to the Aptos ecosystem. :rocket: :rocket: :rocket: :100:

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Summary

Have you come across method that artificially and rapidly inflate the price of an asset and crashes shortly thereafter in the crypto world?

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Interesting info

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Wow, nice article :slight_smile:

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keep up the good work

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interesting opinion, it was helpful

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