It is time to write a cautionary article about the fastest way to lose your money in the crypto world. Yes, you read correctly. A lot of people will tell you this is the fastest way to earn. What are the crypto pump groups? How do they work? Why are they bad? Let’s find out!
Disclaimer! This article talks about why crypto pump groups are a bad idea. If you would like to learn how to trade properly instead, go to the article called The Secrets of Crypto Trading
What are Crypto Pump groups?
Crypto pump groups are organized groups of people that seek out a coin in the market and organize so-called pump. This is an event, in which people get together at a certain time and all buy the announced coin. This makes the coin rise in price even ten times to where it used to be. How much it will rise, it depends solely on the size of the group.
The theory
Sounds great, right? In theory, yes. When I first heard of this, it looked like a certain way to earn money. The plan of these groups is to raise the price of the coin, which gets the attention of the rest of the market. People that are not even in the group join in and raise the price of the coin even more due to Fear Of Missing Out (FOMO for short). And so the price rises even higher. At this point, the group members start selling the coin in small amounts to avoid the so-called “dumping” – an action in which everyone sells everything they have to get most gains and thus driving the price of the coin down. And so, every group member should walk out with a profit. In theory.
The reality
The reality is that in stock or crypto market, there is always a winner and a loser. You can’t win money unless anyone else loses them. When a pump is announced, everyone puts their money in and then the few lucky ones take it away. I’ll use this screenshot as an example:
This is a pump of one of the biggest crypto groups. For those that can’t read the graph, I’ll explain. Every one of those rectangles, called candles, show the change in the price in one minute. At 22:00, the coin EVX was announced in the group with a price of about 0.00001. People bought in and in less than a minute (from what I watched, it was about 10 seconds) the graph went down. The thin line shows you the maximum where it got to (pretty much 0.00004) and the thick line where the graph ended in that one minute. Green ones go up, red ones go down.
In short. The announcement happened, thousands of people bought in and in less than 10 seconds brought the price up to 4x of what it was. At that point, people started selling (or dumping) the coin. And so the coin went down. It drove the price to even lower than where it started.
You can imagine the whole thing as a bunch of people throwing money on the pile and then 10 seconds later everyone tries to grab as much from the pile as they can using a shovel. And the size of the shovel depends on how much you threw in.
Here is another example:
Why are crypto pump groups problematic?
There are several things that make this a problem.
Rigged from the start
This system is designed from the start to make the admins of these groups rich. They are the ones who know what coin will be announced, so they buy the coin before the pump. With this, at any point they sell, they’ll always earn money. These admins are one of the richest people going into the pump since for them, it’s almost no risk. So if one of the admins decides to put in million dollars, they can wait for the price to rise up to the 5 times its price, sell it and bring the price down 5x to what people from the group brought it up to.
Are you fast enough?
If your internet connection is just a little worse than someone else’s, you are already in a massive disadvantage. Again, the first example went down after 10 seconds. That means, if you bought in at any point after those 10 seconds, you were in a loss, no matter when you withdrew from there. And I mean 10 seconds after the administrator pressed enter on their announcement message.
There is a delay in the time before you are able to see the message, there is a delay of the page opening, your internet might be having problems at the very moment, the market can be experiencing connection problems and so on. There are so many variables that can affect how fast you get in that it becomes impossible for people from places with bad infrastructure to gain anything.
Emotional manipulation
First of, if you are trading with emotions, you shouldn’t be trading. Put your money into a few stable assets like Bitcoin and hide the key for about 5-10 years.
If you are trading anyway, just know that these pump groups play with people’s emotions. When the price gets to the top and then it starts falling, they admins will tell you things like “People are starting to notice!”, “Outsiders coming in!” or “The second wave is incoming!” This makes people keep buying in or even hold their money in hopes the price will go back up and they’ll end up with a profit. All that just to watch their money disappear.
False advertising
A lot of these groups work on a VIP system. The most common one is for people to get rewards according to how many people they invite into the group. Because of this, you will see posts where someone attaches a screenshot of an organic price rising by several dozens of % (these happen daily) or sometimes even by hundreds of % (these are rare, but they do happen. GRT was a great example of this) and they will tell you that their group was the reason why this happened. They will use words like “This group pumped GRT by 400%. Join us for easy profits!” The new members then come in and expect similar results, only to be caught in a trap similar to what I have shown before.
Greed, it’s stronger than you think
Another problem is, during a normal trade, you can set your stop-loss. Basically, if the price of the coin drops to a certain price, your sell order will happen and you can prevent yourself from losing more money. In pumps of this magnitude, the price fluctuates so much that things like stop-loss are almost impossible to set up.
What’s worse, people don’t think of this. They will go risk their money in hopes for the best scenario. As you could see above, the price went up to 4x of what it started. When people see this they think “4x? Are you telling me I can get $400 if I put in $100?” Then they start thinking about it. “Wait, what if I put in a $1000? That will get me $4000! I’m a genius!” So they end up putting in a massive amount in hopes to double or triple it.
People like this, even though they might’ve got in sooner than the dump happens, end up losing money because they keep waiting for the price to go up to an unachievable amount.
Trust me, if you think greed doesn’t control you and never tried into trading, I can tell you with almost 100% certainty that you will be proven wrong. One of the biggest challenges of trading for me was to manage my greed. And I thought I was one of the people that are rational about their money. If it happened to me, it can happen to you.
Fear Of Missing Out
The worst thing about these groups is that you hear about them from people. You hear the success stories because they want you to be hyped up about the possible profits. You start hearing that a pump is coming and you start wondering if maybe you should try it. You start to fall a victim to fear of missing out.
At this point, you decide to join in. Maybe you’ll just watch, just to see if it’s legit. You watch the pump happen and the price suddenly rises. This is amazing! You’ve never seen the market manipulated like this! It’s still going up! At this moment, the emotions kick in. What kicks in the most is the fear of missing out, but x 100. Everything is happening so fast you don’t get time to think about your actions, so you put in your money. By the time you did so, the coin is going already down and you watch your money disappear.
“Oh well, it was me being slow. Next time I’ll be faster and make 10 x.” Only the next time you end up doing the same thing again and lose it all.
Legality question
Market manipulation, organized pumps, people taking money from others, this sounds illegal, right? Yes, yes it is. That is if you are talking about stocks. Crypto is decentralized and thus the non-regulated market. That means everything goes. It’s pretty much the wild west of investing. There is a reason why these things are illegal in stock markets and if this would be the same case, people in these crypto pump groups would be facing jail time.
The horror stories – The reason behind this article
I’ve seen so many people fall victim to this. People putting in $6000 and not do any research about how to even use the platform they were risking their money on. There’ve been people losing 97% of their entire portfolio in 5 seconds. I’ve watched people feeling depressed for months after losing in one day what they built in their trading journey in a year. My friend lost a ridiculous amount of money even though I tried to warn him. Watching these hurts. Please, trade responsibly and do your own research. Crypto Pump Groups could be easily compared to casino gambling. Don’t trust the ads!
Here are some people talking about their experience.
As the last thing, I’d like to leave a video here, that shows what these pumps are really like. It is a bit of a meme video, but the real message is in the first two minutes.
Summary
I could have made an article about how these pump groups can give you a stunning amount of money and throw in my invite link, but the reality is, most people lose on these. The first pump I watched had 8k people online. The last pump I watched had 15k. That was EVX. The example I put above. There were people that were absolutely lost after it, coming in with big promises and walking out with nothing. Trade responsibly. Please. Have patience. I will write an article about how to trade responsibly and what are the best things to do once I get enough material.
Meanwhile, stay away from these groups. Buy low, sell high, ALWAYS set up stop loss and always be aware you can lose all your money. Trade with only what you can afford to lose. Chances are, you will lose it. You can always beat the odds, but at least you won’t have unrealistic ideas.
That’s about it. I hope this article opens someone’s eyes and helps some people stay away from these groups. If at least one person reads this and it helps them to stay away from these groups, I did my job. Now, have a nice rest of the day, you beautiful person.
