With the markets sitting in a very volatile state, the risk of a large pump and dump is at an all time high. Simply put, falling Bitcoin prices means that investors are currently very vulnerable. Realistically speaking, since a large majority of the Bitcoin market is owned by a minority of wallets, investors can get together to buy in bulk and then sell in bulk in order to pump and dump. The benefits of this are simple – they control the majority of the market so can buy at the best price, and can agree a time to sell, at the best price.
Does that make sense?
Here’s a more conclusive description of a pump and dump according to Investopedia:
“The scheme can be perpetrated by anyone with access to an online trading account and the ability to convince other investors to buy a stock that is supposedly ready to take off. The schemer can get the action going by buying heavily into a stock that trades on low volume, which usually pumps up the price. The price action induces other investors to buy heavily, pumping the share price even higher. At any point when the schemer feels the buying pressure is ready to fall off, he can dump his shares for a big profit.”
Okay, so a pump and dump within Bitcoin is possible, however it would be very difficult to execute, this is why generally speaking, pump and dump schemes refer to the lesser known and newer cryptocurrencies. The companies and investors behind the coin can retain overall control, ensuring that once they have finished, they can sell at the best price, ensuring they get the highest profit possible.
According to The Next Web,