Learn Concept: Understanding Pump and Dump Schemes in Crypto Market

By: Isha Das

Throughout 2023, analytical studies have found that a majority of new Ethereum tokens introduced may have been targets of pump and dump schemes, a type of market manipulation that involves artificially inflating an asset's price to attract investors before selling off the inflated shares. Whilst these schemes seemingly represented a marginal percentage of Decentralized Exchange (DEX) volume, they raise serious concerns for market integrity and investor protection in the burgeoning crypto space. Despite these manipulative patterns, traders seem largely successful in avoiding these pitfalls, indicating a savvy and informed crypto community.

These studies hint at a greater need for effective regulatory frameworks and self-awareness among traders about such market manipulation tactics. This article aims to delve deeper into the concept of pump and dump schemes in cryptocurrency markets, their impacts, identification, and how to mitigate risks associated with them.