They pump it and then they dump it
The market cap of an cryptocurrencies provides only general indications which then need to be combined to give an overall picture. In many cases, these indicators are severely manipulated—but even that is a strong indicator.
If a value, an ICO, is too heavily promoted — if it is recommended by everyone on every channel and an unnatural level of hype is generated — then it can be compared to the stock floatation of any pink sheet share.
Beware of celebrities
The more an ICO is hyped, the more celebrities—and by that, I mean people who are not from the crypto scene itself, but from Hollywood or superstars in other fields like musicians, artists, and athletes—the greater the caution that needs to be exercised. In some cases, that these hyped campaigns are part of a strategy commonly known as a “pump and dump.”
The initiators make an agreement with so-called influencers, that they will receive, in advance, a certain number of tokens. Then the promoters of the ICO can officially advertise using these celebrity endorsements and the celebrities even advertise the coin and the ICO themselves. Because of the participation and endorsement of these celebrities, other media catch wind of the story and becomes more intensely widely spoken about, written about, and tweeted about.
The outside world gets the impression that a monster ICO is coming and everyone absolutely must be involved. This is true. It becomes a monster ICO. The initiators have ensured that the token is quickly liquid and that the token economy looks good. All the criteria are fulfilled, and it is safe to invest—at least that is what they want you to think.
Missing crypto endorsements
However, for the sharp-eyed observer, two key things are missing. For one thing, there are no endorsements by crypto celebrities; no blockchain experts—real experts—are involved in these ICOs, and it is not discussed within the community. Secondly, either a pre-sale has taken place or there are previously generated coins that have been pre-mined.
Those who now participate in the official ICO will get coins at the issue price and as soon as trading starts, the rate drops for a short time. Why? Because the celebrities and those who are pulling the strings are selling the coins in huge numbers.
Those who think that it does not make sense to purchase at the issue price are thinking correctly from a business point of view, but they have overlooked the fact that these celebrities got their coins at a huge reduction. If you bought at a fifty percent reduction, you could easily sell at one hundred percent, can’t you?
Pump and Dump
Those who purchase cheaply and then push the ICO with their brand and media power (“pump”), can then sell immediately after the ICO at a higher rate than the issue price (“dump”). This is a bargain for them. It is the ordinary ICO participant who is left looking stupid because sometimes the issue price is never regained. A small consolation is that this does not just happen in the crypto world. Nothing different is done in many stock floatations than is done in the world of the big banks.
Behind every pump and dump are the types of people who are willing to do this type of thing, and there are a lot of them. As soon as the truth is no longer guaranteed by a public blockchain, it is no longer the truth. It is the truth that people have invented, and that is why you must look closely at who is behind every ICO before you make a decision to invest.
I have to say good by for now
I hope that I have been able to give you some valuable knowledge with this course, and I hope I have been able to raise your awareness and provide enough information for you to be able to distinguish the nonsense, rip-offs and con artists from the truth.
Of course, you will be told that the situation is not portrayed correctly in this course. Some will warn that a government will switch off Bitcoin and crypto at some point. You will be told that it is better to store your private keys with the miner or the exchange because blockchains are not secure. You will be told that everything will be cracked once quantum computers arrive. That is one (incorrect) perspective.
Those on the other side will praise this course and try to use it to lure you into some rip-off scheme, to sell you involvement in some crypto cloud so-and-so system, to lead you astray, to stimulate your natural greed. A mixture of both formulae will probably be used, depending what they have in mind.
Judge for yourself against the basics of the wise and ignore offers that do not correspond to the rules. Be strong.
I have just one request to close with. If you have enjoyed this course, please pass the word on so that your friends and acquaintances can acquire this knowledge too. Everyone should have a basic knowledge of crypto so that they are not standing open-mouthed having to watch helplessly from the sidelines as the future passes them by.
With this in mind, I wish you all the best and juicy spoils.
Only information, not investment advice This course is not just about the opportunists and rip-off artists that lurk at every turn; it is also about the enormous opportunities that proper ICOs offers to investors. However, it must be stated categorically at this point that this course is only intended to explain and inform. The statements in this course are in no way intended as instructions or advice for investment, nor can they be construed as such. Any investment in an ICO and every purchase and sale of cryptocurrency is undertaken at your own very high risk, and should not be based on any of the statements presented in this course under any circumstances. Do your own due diligence in every instance before you participate in any transaction