Pump and dump are two important concepts in the digital currency market. These two concepts are used to explain the price changes of digital assets in the market. A pump means an increase in the price of digital currencies over a period of time. This price increase is usually due to positive news that has been published about a number of digital currencies. A dump means a sharp drop in the price of digital currencies that occurs over a period of time. The reason for the decrease in the price of digital currencies was due to the negative news that was published about a number of digital currencies. Pump and dump in digital currency is a good opportunity for investors and traders to make money from this market. To get information about the meaning of digital currency pumping and what is the concept of pumping, read the rest of the article.
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The meaning of digital currency pumping
Pumping a digital currency means that the digital asset has increased in price a lot. This price increase occurs in a very short period of time. In general, the increase in the price of a digital currency in a short period of time is called pumping. Usually, the reason for the increase in the price of digital currency is the positive news that has been published about the future of this digital asset. For example, some time ago, Elon Musk changed the logo of Twitter to the logo of Dogecoin, causing a large increase in the price of this digital asset in a very short period of time. The pumping of digital currencies is considered a good opportunity for traders to easily earn money from this market. Of course, note that the pumping of digital currency sometimes brings many risks for traders.
Read more: Learning to invest in digital currency
Therefore, investors should invest more carefully on digital currencies that are pumped. For example, the digital asset may return to its previous price after a few hours, causing losses to traders. In some cases, a digital currency is pumped into the hands of many traders and investors so that they can get more profit from that asset. These people usually do this based on the news that is published about the property they want. Therefore, you should invest very smartly in such assets so as not to lose your capital. Pumping digital currency can cause disorder in the market and also destabilize the market.
Read more: Digital currency training
What is the concept of dump?
Now that you are familiar with the concept of pump, in this section we are going to introduce you to the concept of dump. Dump in digital currency markets means the reduction of a digital asset in a very short period of time. Typically, its price has fallen due to negative news that has been published about the future of that digital asset. This is useful for people who have been able to fluctuate the market well; Because in this way they can earn a good income from that digital asset. For example, when the price of digital currency drops suddenly, most traders start buying that asset to sell it at another time. Of course, this issue can bring risks for traders.
Read more: digital currency fluctuations training
If the price of the digital asset falls below the amount that the traders bought, it will cause the traders to lose. People who study the market well and master digital currency technical analysis can earn good income. Stop-Loss allows traders to prevent large losses. Successful investors and traders are always looking for positive and negative news about digital currencies to double their capital. The digital currency market is very volatile, so traders are looking for such profitable opportunities to double their capital.
The difference between pump and dump
Until this part of the article, you got to know the meaning of pumping in digital currency and the concept of dumping. In this section, we will discuss the difference between dump and what is the concept of pump. Most likely, by reading the previous two sections, you have somewhat understood the difference between dump and dump. Pump and dump in digital currency can make traders earn money in the digital currency market. What is the concept of pump? A pump means a sudden increase in the price of digital currencies; But a dump means a one-time reduction in the price of a digital asset. Pumping or dumping digital currencies can occur due to high or low volume of transactions. Dumping can happen due to negative news, economic sanctions that are published about a bunch of digital assets.
Read more: Cryptocurrency Price Fluctuations
Investors can use different methods to avoid pumping and dumping a digital currency. The best way to avoid is to use Stop-Loss. In addition, traders can avoid dumping and pumping by adjusting and managing the size of transactions, adjusting profit and risk, hedging methods, etc.
Pump and dump in digital currency are two different concepts in the digital currency market that traders should be aware of. Pump means an increase in the price of digital currency in a short period of time; But a dump means a decrease in the price of digital currency in a short period of time. This rise and fall in price is usually due to positive and negative news about that digital asset. Also, the high or low volume of transactions, political and economic developments in other countries and economic sanctions cause pump and dump in digital currency. Investors should be able to take advantage of these opportunities and increase their income. People who do not know about these two people will suffer a lot of loss. In this article, we tried to introduce you to two other concepts in the digital currency market to increase your income.