Avoid mistakes, and become a winner in crypto pump schemes. Learn about the psychological factors influencing everyone in crypto pump and dump schemes.
The cryptocurrency world is dynamic in nature and, more importantly, comes with so many ways to profit from it. One of the ways to profit from the cryptocurrency industry is with the crypto pump and dump schemes. But what does crypto pump and dump mean?
Unlike investing in cryptocurrencies like Bitcoin, Ethereum, and the like, the crypto pump and dump scheme involves investing in new cryptocurrencies hyped by influencers, and when the value increases, it’s sold. The financial implications of investing in cryptocurrencies are worth considering, but the psychological ones should be noticed. If you are new to the topic you should check our overview for crypto pump and dump strategies here.
In this article, we will be exploring the psychological factors influencing people involved in crypto pump-and-dump schemes.
What Motivates People Involved in Crypto Pump and Dumps Scheme?
Is it a crypto pump-and-dump scam? This question is quite common when people search for new ways to make money with cryptocurrency. Investigating this scheme reveals deeper insights that there is more than meets the eye.
The idea of the crypto pump and dump scheme is to influence the value of a cryptocurrency token, making it profitable and selling it before the price crashes. While it may seem perplexing why anyone will invest in a crypto pump and dump signals, several factors motivate people to do it:
- Get Rich Quick
- FOMO Factor
- Thrills of High-Risk Investments
- Social Pressure
Let’s dive into them in detail.
· Get Rich Quick
One of the motives behind anyone investing in crypto pump-and-dump schemes is because of the sheer intention of getting rich quickly. The crypto pump and dump scheme is a short-term investment plan. As such, people invest in this scheme simply because they don’t want to wait for the value of traditional crypto to rise. Or because they don’t have the bulk of cash to invest in traditional crypto since the rate of increment of its value is not as fast as pump-and-dump tokens.
· FOMO Factor (Fear of missing out)
Another reason many people are involved in this scheme is because of FOMO or the fear of missing out. FOMO is an emotional response to believing that others are getting better deals investing in crypto assets. This dissatisfaction and anxiety created by FOMO can lead to people desiring interaction and connection with the scheme.
FOMO is the driving force pushing the pump-and-dump scheme, as individuals responsible for the hype may not necessarily portray all the facts about the crypto asset.
· Thrills of High-Risk Investment
Some investors are naturally risk-takers. Such individuals are likely to participate in risky investment programs like crypto pump-and-dump schemes. People with a high-risk tolerance will find investing in this crypto scheme thrilling and fulfilling, which is their motive for investing.
· Social Pressure
Peer pressure is another factor influencing an individual to invest in a crypto pump-and-dump scheme. Even though investing in this scheme may not be what an individual would ideally do, because your peers are involved, it creates pressure to conform to the group. Anyone who doesn’t get on board this campaign will have a feeling of isolation, making them betray their authentic needs and wants.
Why Many People Lose Funds in Crypto Pump and Dump Schemes?
Is crypto pump and dump illegal? Why do people lose their funds investing in crypto pump-and-dump schemes? The laws and regulations regarding crypto pump and dump schemes are vague and vary from jurisdiction to jurisdiction.
However, the legality of the scheme is not the reason people lose their funds in this scheme. Below are some reasons people lose their funds so you can avoid making the same mistake.
Little to No Background Research
Making money with the crypto pump-and-dump scheme has much to do with research. Before investing in any crypto asset, it’s important to read the whitepaper.
The whitepaper outlines details on how the cryptocurrency was formed and future plans for the asset. Also, you should perform due diligence to determine who creates the assets. When not enough research is done, individuals will end up investing in the wrong assets, which will lead to a loss of funds.
Overconfidence is another reason people lose money when investing in crypto pump-and-dump schemes. Peradventure, the thrill of being successful in a past investment, can make them feel overconfident in their skill. However, being overconfident can lead to misjudgment when pulling out of an investment.
Although being confident in your decision is great, when it becomes excessive, it clouds your judgment.
Bias in Decision-making
When an investor becomes biased in deciding what scheme to invest in, this can lead to losses. The biases can come in many forms, for example, putting all your investment decisions in an influencer you trust rather than your research. Bias in your decision-making is misleading.
How Do You Stay on Top of Crypto Pump-and-dump Schemes?
If you want to be on top of the crypto pump and dump chart, you must know how to stay afloat. There are several things you can do to be ahead. This section will introduce some tricks you can use to be more successful with crypto pump and dump.
Stay Up to Date on New Coin Listings
One way to successfully invest in a crypto pump and the dop token is to be up to date with new crypto coin listings. Early investors in the scheme are the ones that make the most profit. They buy the crypto asset while it’s cheap and sell when the price has surged. There are many ways to get the crypto pump and dump news of coin listing. But most people rely on crypto pump and dump trackers and crypto pump and dump telegram groups.
Utilize a Pump and Dump Bot
Another trick some investors use to get the best deals from crypto pump-and-dump schemes is by utilising bots. A crypto pump and dump bot is a fast and efficient way to monitor the performance of crypto assets. AI has programmed this bot to make the process seamless for users.
Follow Crypto Pump and Dump Communities
Finally, individuals can remain profitable with this scheme by following up on crypto assets on the crypto pump and dump groups. These groups could be a crypto pump and dump groups Discord, crypto pump and dump Telegram groups, crypto pump and dump Reddit, etc.
Crypto pumps only happen on the announced cryptocurrency exchange. If you want to find more communites for the different crypto exchanges check the following articles on the most popular crypto pump groups:
- Binance crypto pump groups for Binance Exchange
- KuCoin crypto pump groups for KuCoin Exchange
- Gateio crypto pump groups for the Gate.io Exchange
- MEXC crypto pump groups for the MEXC Global Exchange
Joining this community gives you access to a pool of crypto enthusiasts interested in the same investment scheme as you. So, in areas where you are lacking, these individuals can help shed more light on it, helping you make better decisions.
Summarily, crypto pump-and-dump schemes can be profitable if you take the risk. It is a high-risk investment plan but has a high turnover rate in a very short period. Understanding the psychological factors influencing this investment plan should help you know what to avoid to get the best out of it.
And as always, this is not financial advice and always do your own research.