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6.
Pumping is an often frowned-upon practice of market manipulation where the people behind a coin create artificial shortages of it and then imitate high demand.
Generally, the largest share of cryptocurrency trading takes place in the order books of various online exchanges. Individual traders list their buy and sell orders there, at prices acceptable to them.
Sometimes, this natural process may be disrupted by people looking to “pump” a coin. Usually, it starts with buying out all orders which are listed at or near the current average price. This process is done covertly, and the price is monitored the entire time so as to not let it rise uncontrollably.
After the order book has been emptied like that several times, it results in an artificial shortage of coins. After a short delay, the market reacts and the price goes up due to the insufficient supply.
This practice is generally looked down upon in the cryptocurrency community as it is mostly used as part of the “pump and dump” schemes where the coins are sold immediately after the price surge, making it crash again.
However, it is not all doom and gloom – cryptocurrencies exist in open markets, so absolutely anyone can take advantage of the movement of the price. One just has to know where to look for signs of an upcoming pump, and there are already some useful tools out there which can help you with that.
One such example is CryptoPing, a Telegram bot which monitors all altcoin markets in real time and alerts users whenever it detects an upcoming pump. In order to make meaningful decisions on the crypto markets, one needs to process vast amounts of data, so the help of such software instruments may be invaluable to prudent traders.
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