Pump and Pump: Understanding Psychology behind the instability of the crypto-wave market
In the label, however, below the surface of this speculative rabies
The phenomenon refers to a strategy used by some market participants to artificially inflate prices in the exchange of cryptocurrencies or ecosystems. This is achieved by a combination of factor, including:
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- Speculation and Fomo (fear of disappearance)
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The “PET” phase usually begins several months before the announcement or update, as advocates are preparing the market for a potential release or improvement. During this time, prices increase.
Pump-Rasquee: When markets become too unstable
However, when prices finally make their goal, the market can become unstable. This is often called “pumps” and a phenomenon where the influx of new customers is an immense pressure on the already prices of tokens, which causes the prices to jump even more.
The grip usually begins for several weeks or months after an announcement or update has occurred, when he has bought a significant number of investors. As demand increases, prices increase rapidly, often by 10-20% daily or more. However
Systemic risks: Why the pump can be pernicious
Easy and demand in the emergence market, there are several systemic risks in the game. This includes:
- Liquinity crises :
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Reward: Understanding why investors should be careful
Bump-Squeeze as an opportunity to exploit the growing price of the crypto currency, others should be more careful. The reward is clear: Extreme price movements can result in significant financial losses for those who buy at the wrong time.
Investors should access any cryptocurrency market with caution, recognizing this:
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