If you’ve been in crypto long enough, you’ve seen it: a random coin suddenly pumps 300% in a day, Twitter screams “to the moon,” and by the time you ape in, it’s already dumping back to zero. That’s a pump and dump — one of the oldest games in the book. While crypto gives insane opportunities, it also attracts manipulators who prey on FOMO. Let’s break down how pump and dumps work, how to spot them, and how to avoid becoming exit liquidity.
What Is a Pump and Dump?
A pump and dump is when insiders or whales artificially inflate the price of a coin through hype, coordinated buying, or fake volume — then dump their bags on retail buyers who arrive late.
Classic formula:
- Accumulate: Insiders buy a cheap token quietly.
- Pump: Shill hard on Twitter, Telegram, TikTok — “next 100x!”
- Retail rushes in: Price skyrockets.
- Dump: Insiders sell at the top, price crashes, retail gets rekt.
Why Pump and Dumps Happen So Much in Crypto
- Low liquidity: Many small coins can be moved by just a few million dollars.
- 24/7 markets: No closing bell, manipulation never sleeps.
- Anons & no regulation: Anyone can create and shill a token with zero accountability.
- Hype culture: Memes, CT, and Telegram pump groups fuel FOMO.
Famous Examples
- Bitconnect (2017): The king of all scams. Promised guaranteed returns, collapsed in spectacular fashion.
- SafeMoon (2021): Pumped hard on TikTok and Twitter, then insiders dumped.
- Random memecoins every week: In 2024, Solana’s meme season saw dozens of coins pump 100x in days — but 95% dumped to near zero within weeks.
Red Flags of a Pump and Dump
- No real utility: The project does nothing, just hype and memes.
- Sketchy liquidity: If liquidity isn’t locked, devs can pull it instantly.
- Concentrated holders: A few wallets hold most of the supply.
- Overhyped marketing: Paid influencers shilling the same coin everywhere.
- Telegram pump groups: “Buy now, next 10x gem” — instant 🚩.
- Fake volume: Bots pumping trades to make it look active.
How to Protect Yourself
- Check liquidity: Use tools like DEXTools to see if it’s locked.
- Check holders: If top 10 wallets hold 80% of supply, you’re screwed.
- Don’t chase green candles: If a coin is already up 500% today, you’re late.
- DYOR on tokenomics: If it’s just hype with no plan, stay out.
- Stick to blue-chips for safety: BTC, ETH, SOL — way less prone to manipulation.
Pro Tips for Degens
- If you play memes, only risk what you can afford to lose.
- Take profits fast — never marry a pump coin.
- Diversify across several plays instead of going all-in on one hype train.
- Watch whale wallets on-chain. If insiders are selling, get out.
Real-World Example
In 2024, a Solana meme coin pumped from $500k market cap to $50M in under 48 hours after big influencers pushed it. Early buyers 100x’d. But late buyers who aped at $40M+ saw their bags drop 95% in days. Same story, every cycle.
Final Thoughts: Don’t Be Exit Liquidity
Pump and dumps aren’t going away. They’re part of crypto culture — some even embrace them as short-term plays. But if you don’t know the game, you’re the victim, not the winner.
The key is to recognize the signs, control your FOMO, and only play with money you’re willing to lose. If you want real long-term wealth, focus on projects with solid tokenomics, strong communities, and proven adoption.
Crypto has life-changing upside, but only for those who survive the scams. Spot the pumps, dodge the dumps, and stay in the game. Wagmi. 🚀
