There is momentum behind Amp crypto. But once the pumpers dumped, the value diminished significantly. That being said, we still expect big things from this relatively new token. Is another 1,000% jump in value possible? Of course. But it’s going to take some time.
Pump and Dump (P&D) is a standard scheme used in cryptocurrency Trading that involves inflating the price of an owned cryptocurrency through misleading statements. To sell the cheaply purchased cryptocurrency at a higher price.
In a largely unregulated investment market, things can get even trickier. While pump-and-dump schemes are illegal in the stock market, regulations for crypto are still developing, so fraudsters are seizing the opportunity to see what they can get away with.
What is pump and dump?
Many Pump and Dump schemes are organized via groups of the popular messaging app Telegram. The organizers try to get as many people into the groups where they pretend to share insider information on the evolution of the cryptocurrency project and prices.
Usually, they pick a relatively small coin with lower market capitalization, so the impact of a couple of hundred buyers will be significant on the price. Then they start sharing positive information that, in most cases, has no fundamentals behind it.
People begin buying cryptocurrency, and as the price increases, more and more people start believing the organizers. In general, there are various stages of price inflation.
Usually, they state a very concrete point in time where participants of the group should start to buy the coin. Towards the end of the action, the organizers would sell the coin with massive gains. Soon after, the price would fall again and return to the initial value or even below since previous regular investors lost trust in the project.
How does pump and dump work?
In a pump and dump scheme, the price of a worthless asset, usually a penny stock with a low market cap, is artificially inflated through well-planned marketing.
False statements, misleading statements, many social media posts, co-signs, and other chicanery are used to get the word out that a worthless asset is a hot buy that investors do not want to miss out on (the pump).
To support these claims, the price of the worthless asset is increasing rapidly due to the well-planned pump. Once investors get the word about the worthless asset and see its price rising rapidly, more investors start to buy up shares of the stock.
It is when individuals in the pump and dump scheme will sell or “dump” the shares of the overvalued asset. These individuals profit from selling the asset at its peak for many times more than the price they purchased. When they begin to sell their shares of the overvalued asset, the price of the asset tanks and corrects to a more accurate and appropriate valuation.
Pump Stage
Once the coin is decided, organizers buy their load. It gives them a head start to receive the highest benefit from the spike. However, organizers need to be careful that they do not pre-pump the coin.
If the coin is pre-pumped, i.e., the purchase of coins by organizers before the pump, they will lose their group fans, and none would participate. Organizers need to be very careful not to pre-pump, i.e., if the coin volume on the exchange is low, the pump will spike the price. Once the group administrators have purchased, the coin’s information is passed to paid members and then to the outer participants of the scheme. If other traders notice the pump on the exchange who are not part of the group, they too will purchase it.
Dump Stage
Organizers who bought coins in advance now sell or dump their coins on the outer circle, which is still buying due to the pump. The quick sale brings the coin back to its initial value or lower, resulting in heavy losses for those who purchased the token at the later stage of the pump. However, at times it is noticed that pumps lift the coin price permanently or at least for a few days.
Another type of P&D scheme is the celebrity pump; the most notable is the John Mcafee pump. Organizers select a coin, and the celebrity is paid their fees to pump the given coin. The benefit is that celebrities have many followers, leading them to influence newcomers to the crypto market easily.
The Pump & Dump coins is a hazardous scheme, especially when you are not part of the inner circle. Although, overall, this type of practice can harm the crypto space image in the longer run. If an influential person is asked by an anonymous person to dump on third-party coins, it could create an unstable market space.
The lack of regulation in the cryptocurrency market gives rise to such practices. Hence, it is best to research coins that will last over the long term and their purpose before investing in them.
By trading and investing in higher volume cryptocurrencies, researching promising lower cap coins above a certain volume threshold, for instance, 10,000, 5,000, etc., BTC per day, and learning technical analysis, you can avoid being caught up in the shenanigans of P&D groups.
Consequences of pump and dump in crypto
During the execution of Pump and Dump schemes, various smaller investors get ripped off their funds since they usually suffer from losses while the organizers see significant gains. For the cryptocurrency affected, the scheme may cause a loss of trust in the community behind it and, therefore, may cause the project to suffer long-term negative consequences.
There is momentum behind Amp crypto. But once the pumpers dumped, the value diminished significantly. That being said, we still expect big things from this relatively new token. Is another 1,000% jump in value possible? Of course. But it’s going to take some time.
What we need to see is further adoption.
Optimistic future growth potential for AMP token. Thanks to access becoming easier than ever.
If its verifiable collateralization system of collateral partitions and managers begins to be adopted at a larger scale, Amp crypto isn’t likely to be trading for pennies for much longer. It might not be a great token for day trading crypto. However, AMP crypto could provide a nice payday in the years to come for buy-and-holders.
In its AMP prediction, DigitalCoin Price expected the token to grow to $0.036 in 2022. In its longer-term outlook, the forecasting company saw AMP rising to $0.053 by 2025 and eventually hitting $0.08 in 2028.
Coinjournal’s cryptocurrency analyst, Motiur Rahman, said that AMP addresses a vital segment of the crypto industry – the collateralization of assets, which gives the industry a new dimension.
“Users will be able to use collateralized crypto assets in contract finance and credit finance. A lot of wealth is already tied into the cryptocurrency industry, and AMP opens the door for unlimited applications in real-life situations,” Rahman told capital.com.
“Although the coin recently spiked, trading at a new 30-day high, it is still several levels below its yearly highs of about $0.11, which leaves a lot of room for the rally to continue”.
Overall, as more merchants integrate payments capabilities with Flexa, AMP’s use case could become more vital, potentially boosting the token’s price.
Source: https://investmentu.com/amp-crypto/
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