I just remembered an old but fairly dramatic story in the crypto world — back in May 2020, the Tierion (TNT) coin surged by nearly 45% in just a few days, from 0.05 USD to 0.11 USD, and then plunged to 0.03 USD after 10 days. There was no special news—just a few positive comments on social media. That’s a classic example of what a pump is, which many new traders still don’t fully understand.

Put simply, what a pump is: it’s when a group of large investors (called cá mập) begins buying a large amount of coin at low prices, then creates positive information to stir up the community’s FOMO psychology, pushing the price higher. When the price hits the peak, they sell everything (dump) to make huge profits, while the late buyers are left stuck at high prices.

Why does a pump happen? There are 4 main reasons you need to understand. First is liquidity among large investors — these cá mập hold capital many times larger than normal trading, allowing them to easily manipulate the psychology of small retail investors. Second is the FOMO psychological effect (fear of missing out) — cá mập take advantage of this feeling to push newcomers to join in. Third is unclear legal regulation in the crypto market, completely different from the stock market which has investor protection measures. Finally, it’s ICO activities, where experienced cá mập take advantage to inflate prices.

The process of a pump-and-dump strategy usually includes 3 steps. The first step is accumulation — investors buy large amounts when the price is still low to stock up. The second step is pumping and holding the price — they create forums, fake comments, and positive discussions to manipulate sentiment and push the price toward the target. The third step is dumping — they sell everything to profit, leaving late investors at a loss.

What are the signs of a pump strategy that you should watch for? If you see a coin’s price jump suddenly within a few hours or a few days without any special news, that’s a warning. If a small-cap coin suddenly gets mentioned by a celebrity or becomes a hot topic on social media, be careful. If you notice that many forums, Telegram groups, or Facebook pages suddenly start discussing a coin that previously no one knew much about, that could also be a signal.

So how do you protect yourself? I suggest 4 ways to avoid pump-and-dump traps. First, research thoroughly before investing — learn about the team, real-world applications, and strategic partners. Second, limit the impact of herd mentality — remember there are always other opportunities, and there’s no need to chase trends. Third, manage risk effectively — make a detailed plan and determine the appropriate capital allocation before entering. Finally, prioritize coins with large market caps, a trusted team, and a long track record — these are harder to manipulate.

Understanding what a pump is and how it works is an important step to protect your assets in the crypto market. By mastering this knowledge, managing risk well, and avoiding getting pulled into the crowd frenzy, you’ll have a higher chance of success on your crypto trading journey.