I've noticed that many newcomers to crypto often fall victim to the same scheme. A pump and dump is when a group of manipulators massively sell off an asset at an inflated price, causing panic and a sharp decline in value. But that's only half the story.

In reality, it all starts with a pump. First, a coordinated group begins buying the asset in large volumes, spreading false information, and creating hype on social media. The price soars, attracting beginners who think they’re missing out. Everyone starts buying. And once the trading volume is sufficient, the dump begins — that’s when they all exit their positions simultaneously, and the price crashes into a free fall.

The mechanism is simple but effective. They use the internet, social media, and fake news. All of this is coordinated through private channels. Investors who are unaware lose significant money because they don’t get out in time.

The consequences for the market can be serious. Sudden price swings destroy trust, increase volatility, and attract regulatory attention. For individual investors, this can mean a complete loss of capital.

How to protect yourself? First, don’t blindly follow advice from suspicious sources. Conduct your own analysis, watch trading volumes, and study the fundamental indicators of the asset. Second, be skeptical of sharp price increases without apparent reasons. Third, stay informed about news and events in the market; don’t rely solely on hype.

In general, pump and dump schemes are a serious risk that must be taken into account. The main weapons against such schemes are awareness and common sense. It’s better to miss a few trades than to lose your capital to manipulation.