Using the pump and dump method in order to make money from altcoins is certainly becoming more popular, and when you look at the profit that can be made, then it is pretty obvious as to why this is the case. However, even though it is cool to look at a way that is going to almost guarantee that you make cash, there is still a sense of being required to understand the methodology behind the approach so you can then put the correct things into action.
Perhaps the best part in all of this is that it is very easy to follow even if you are relatively new to the entire cryptocurrency trading idea. In fact, all that is going to be required from your side of the bargain is the ability to really follow some simple instructions and to be alert when the pump and dump is happening. Now, if you feel that you can indeed achieve that, then you are going to be onto quite a good thing here.
The Basics of a Pump and Dump.
Just before we go into an example of how the entire thing works, let’s provide a quick and straightforward explanation as to the absolute basics of the pump and dump option.
Basically, you have a group of people that work in tandem with one another who then go ahead and select an altcoin that they wish to target. This is all co-ordinated from the very beginning to make sure that everyone is working from the same point.
At an agreed time, everyone in the pump and dump group will go ahead and purchase as much of those coins as they can, at which point the price is going to clearly skyrocket as the traders out there suddenly realize that this altcoin is hot at this moment. Thanks to this, they then start to purchase the coins as well which keeps pushing the price up even higher as people try to get in on this movement.
However, that all comes to an end when, at an agreed time, everyone in the group that has bought the altcoin will then sell it, and because of the sheer mass of coins being sold, it brings the price back down by a substantial amount. That is the part that is referred to as the dump as the altcoin is effectively being dumped back on the open market.
In other words, a pump and dump group will be able to artificially enhance the value of an altcoin and then drop it back down, and by doing this action they are then able to make money from the trade in a way that we are going to explain in a bit more detail.
Looking at an Example.
The easiest way to really explain how you are able to make money from pump and dump with altcoins is to check out an actual example. By doing so, you can see the difference that the process makes as well as then being in a position to notice where the profit is made by those involved in the group.
A few years ago, the $AMZN altcoin was at the focal point of a pump and dump approach. At an agreed time, people bought a substantial volume of the coin which saw the price increase by a significant percentage. You can even see the difference in the value in the chart to get a better understanding of the way in which the pump and dump can have a major impact on the price of the altcoin.
What the image also shows is the absolute drop in value when the dump occurred, and this is a perfect example of what goes on with each and every altcoin that is handled in this way. In fact, the drop-off with this example is not even as severe as it has been with other altcoins on the market.
How the Profit is Made.
So, how is the profit made? Why is this such a lucrative approach for so many people that are looking to make fast money with cryptocurrency?
To understand things better, we can look at that price per token as that is going to be the key. People simply buy the altcoin at a low price, but because we are talking about a huge number of coins being purchased in a short blast, then the price increases as you see in the graph. The pump could last for 5 minutes, 20 minutes, hours, or a day as it always pushes up the price of the altcoin.
As the price has been increased, it then makes sense for those involved in the pump to then sell the coins en-masse. In doing so, they keep the difference in value that they have artificially achieved, and when you are talking about a huge number of coins, then this can ultimately turn into a healthy profit. Also, with a number of these events happening every week, you can start to see how it can turn into a good money making process for anybody that is involved in the action.
With all of this, the main thing is in being able to just follow the instructions that are being passed on by the people behind the decision as to which altcoin is going to be targeted and when it is going to happen. As long as you can do that, then there should be no problems whatsoever and you can really then see how it can ultimately prove to be difficult not to make money from a pump and dump group.
The key is in getting into the correct group and being part of the process from the voting as to which coin will be targeted to how long the pump should last for. As long as you have money to spend on purchasing the initial coins, then you seriously have nothing to lose, and how many money making ideas out there can you actually say that about?