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5) Whales and Pump Dump-


Whales in crypto refer to people who hold large amounts of a particular coin. These whales generally refer to the huge players in a market. They acquire bulk coins at a lower price. The price of this particular token can be manipulated by them as they possess a large amount of them. These groups jump into action at a particular time. The Prices can go up for a longer duration of time and, the costs would keep rising till they sell.T his would be dangerous if you buy at a time where there is a pump, but a great deal of profit when you sell it at high. The reason behind the coin staying liquid during this pumping process is that generally, the slower members of a group would end up buying the high-priced coins from the faster members. Most of the times, after a coin is pumped, it would settle at a price that is higher than the original price offered,  Its better holding on to a coin which gets pumped and dumped. Thereby, the investor ends up enjoying high profits by getting rid of the low invested coins.


Now, let’s take a look at these pump dump mechanisms-

Pump and dump operations are a certain kind of scams which take its operation in a comparative straightforward manner. It just involves the inflation of a price of a token or coin that is not that popular by framing false news to create a hype and thus creates a pump. Here in this process, there are mainly two parties involved. The first is the market players who behold a large amount of these coins and would create a  hype by circulating the pump via social media. These pumpers will function in groups, and these coins which could be easily manipulated are considered to be the best target. These tokens which are pumped usually have a low circulating supply and small market cap.

Whales in Cryptocurrency

When the  “pump” creates a hype across social media, which would lead other investors to purchase the token. Smaller investors would buy in this situation due to the FOMO, or “fear of missing out” effect. This would further increase the value of the token. After the pumping had taken place, the pump group would sell off their token in an integrated manner to other investors who don’t suspect this. Now after this is sold off, the value of the token is said to crash down causing a “ dump”.

These pumpers having made huge profits, with their comparatively useless assets then walk away with massive profits.