Crypto Market Manipulation: Pump-and-Dump Schemes Kill Investor Confidence.

The cryptocurrency market has provided numerous opportunities to the whole world, yet it is accompanied by severe threats. Market manipulation, in particular, pump-and-dump schemes, is one of the biggest issues in the crypto space.

Such plans have made a lot of individuals lose cash and confidence. I have realized that where manipulation becomes a norm, investor confidence is killed bit by bit, and the market as a whole is hit.

A pump-and-dump scheme occurs when an organization artificially enhances the cost of a cryptocurrency. They achieve this by hype spreading, fake news or inflated promises via social media, personal communities, or influencers.

The price increases rapidly as the number of individuals who are hurrying to purchase it continues to increase. This stage is called the “pump.” When the price is high enough, the pioneer promoters sell their interests and make a profit. This is a rushed selling resulting in the price dropping and this is referred to as the dump.

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New or experienced investors are usually most of the victims of pump-and-dump schemes. Numerous individuals venture into the crypto market in the hope of getting an easy buck. They fear being left out when they observe a coin soaring high hence they will end up spending cash without investigating on the product.

I have observed that such schemes tend to be emotional and promises of large gains to capitalize on individuals. Unfortunately, as the dump occurs, late purchasers are afflicted with huge losses.

Pump-and-dump scheme is very harmful to investing confidence. Whenever individuals lose money through manipulation, they start questioning the reasonability of the crypto market. There are also those investors who pull out entirely and others are scared of investing further.

In my opinion, this fear will slow down the adoption and will decreased long-term capital inflow into the market. Without trust in a market, it is unable to develop in a healthy manner.

Other detrimental impacts include destruction of legitimate projects. The projects are very real blockchains with high technology and actual applications, which are usually overlooked due to investors fearing being duped.

The distorted tokens take the back seat when it comes to innovation that would be taken seriously and thus good projects have a difficult time raising funds and expanding. This leaves a negative impression of the whole crypto industry.

To sum up, the crypto market is under a significant danger of pump-and-dump schemes. They make people lose money, make people lose trust and decelerate the long-term development.

In my opinion, these schemes can be reduced with the help of better education, more effective regulations, and personal responsibility. Once investors learn how to research correctly and not be hype-led, confidence will gradually come about and the crypto market will become more stable and reliable.