How to avoid getting hooked: the real anatomy of pump-dump schemes in crypto

Pumping-dump is not just manipulation, it's a well-tuned machine. And it works precisely because 90% of traders do not see its inner workings.

How it looks in practice

Everything starts peacefully. A message appears on the Telegram channel with 5K subscribers: “Guys, this little-known token is gold. Microcap, huge potential.” At the same time, on Twitter, analysts post beautiful charts with target prices of 10x. In reality, the organizers have already accumulated a position over a couple of days at the minimum.

Phase 1: Pump. A wave of buying begins. The price can rise from $0.001 to $0.1 in a week. On the chart, it looks like a rocket. FOMO grips newcomers — they fear missing out and throw money into the position. Trading volumes increase by 100 times. Everything seems real.

Phase 2: Dump. The organizers start selling en masse. The price drops as sharply as it rose. Within 48 hours, it can return to initial levels or even lower. Those who entered at the peak are now sitting at -80%, -90%.

Why it works

Because the psychology of the market is stronger than the fundamentals. Especially in crypto. People see green candles and lose their heads. They see recommendations from authoritative accounts and do not check whether it is planned advertising.

They do not look:

• A concentration of tokens ( if 50% is in the hands of one wallet — this is a red flag )
• In the history of developers ( this is often their first project )
• The liquidity volumes ( may be surrounded by glass — low liquidity)

How to protect yourself

1. 10X Rule. If an asset has risen 10 times in a week, it's a reason to be cautious, not to jump into a position.

2. Check the messages. Who recommends? What are their motives? Is it an unknown newcomer or a proven analyst? (Even proven ones can be wrong.)

3. Look at the liquidity charts. On DEXs, you can see the curve: if the price jumps by 50% with a large volume, the liquidity is fake.

4. Fundamentals first. Does the project have real code? Who is the team behind it? Is there a mainnet or just promises?

5. Position Size. Never throw more into an unknown asset than you can afford to lose.

Output

Pumping-dump schemes will exist as long as there are newcomers ready to earn in a week. Regularly, there are “carpet bombings” of entire sectors in the crypto market. This is normal. You just need to avoid standing at the point of impact.

Being informed does not mean being paranoid. It means trading with open eyes.