One thing I don't understand about pump and dump ...

[cafucafucafu]

Why does the price go back to the point before the pump?

If a pump and dump is occurring then surely the one who initiated the pump was not the only one who bought on the up trend. They simply initiated the pump and fanned its flames. Other buyers would buy on the up trend too. Then the initiator does a dump - but they possibly cannot bring the price back down to what it was when the pump started (without making a loss) because they would have to sell more than what they bought.

So why does the price go back to the starting point?

[yogi]

The idea is to cause other speculators to panic buy on the pump and panic sell on the dump.

[cafucafucafu]

The idea is to cause other speculators to panic buy on the pump and panic sell on the dump.

A dump is initiated by a whale. It's not by other small fish speculators. E.g. today's dump has no down trend. Over the last few weeks it been slow up trends followed by big dumps. This means a whale is dumping but the minnows are not. Thus where does the whale make money if the price goes back to the starting point?

[ensurance982]

It's mostly that people don't 'buy' or 'trust' the pump. They rather use the chance of entering a short position at a higher point. It's quite sad, yeah ^^'

[Amph]

because other whales dump too, if they see a good pump , in the end only noobs's money are sucked into the pump(and perhaps some semi pro is taken as well)

[cafucafucafu]

It's mostly that people don't 'buy' or 'trust' the pump. They rather use the chance of entering a short position at a higher point. It's quite sad, yeah ^^'

Then who is making money and who is losing it?

[bronan]

Well i disagree that its initiated by a whale, especially in bitcoin there are not many out there who could dump btc enough to make a difference.
However a group of large owners would very possible.
Its easy for example banks to easily play with bitcoin because for them the total value of bitcoin still is pocket money for large banks.
But i do not believe these greeders to take a risk of loosing one of their precious cents they took from your income.
They rather spend it on ceo, board of directors, traders and the likes in salary.

[cafucafucafu]

because other whales dump too, if they see a good pump , in the end only noobs's money are sucked into the pump(and perhaps some semi pro is taken as well)

But this still doesn't explain how the price goes back to the starting point. The noobs don't sell in a dump - I think.

If your theory is correct then there is no organic growth at all. The price is all down to trading.

[gentlemand]

If your theory is correct then there is no organic growth at all. The price is all down to trading.

I thought that was pretty much a given anyway. A few hundred people at best are probably totally in control of where the price goes.

There's organic growth and productive activity but it would need to be an awful lot bigger to affect the current cabal. A real transaction is a minute proportion of a market dump.

[Amph]

because other whales dump too, if they see a good pump , in the end only noobs's money are sucked into the pump(and perhaps some semi pro is taken as well)

But this still doesn't explain how the price goes back to the starting point. The noobs don't sell in a dump - I think.

If your theory is correct then there is no organic growth at all. The price is all down to trading.

well it's not returning exactly at the same level before the pump, for every pump there is a small correction in price that rise the value by a little

in about 5 years the value is 250, if we start from 0 to today, we can say that bitcoin is rising about 0.15 cent a day

[cafucafucafu]

well it's not returning exactly at the same level before the pump, for every pump there is a small correction in price that rise the value by a little

This is exactly what I am talking about. I don't see the small increase in price. We are back to 245 after all these pumps?

[Amph]

well it's not returning exactly at the same level before the pump, for every pump there is a small correction in price that rise the value by a little

This is exactly what I am talking about. I don't see the small increase in price. We are back to 245 after all these pumps?

yeah, this is due because there are only whales that are playing now, and no newbies, that small correction was probably caused by them i guess

[techgeek]

Pump and dump usually comes from news PR, hype.

Then after the good news is over, its time to not buy in but always sell at each PR blitz. Or having news convicing people to invest / buy whatever good news it maybe. You can see how pennystocks are operated the same way as well.

[cafucafucafu]

well it's not returning exactly at the same level before the pump, for every pump there is a small correction in price that rise the value by a little

This is exactly what I am talking about. I don't see the small increase in price. We are back to 245 after all these pumps?

yeah, this is due because there are only whales that are playing now, and no newbie, that small correction was probably caused by them i guess

I guess this is right. In the past I noticed that a pump & dump period never went down to the same value. But in recent times it has.

[RodeoX]

I have a theory. A traditional P&D is done with stocks. You hype the price and let the speculators drive the price beyond it's value, then you divest and leave everyone else holding the bag when reality returns. This causes a collapse of the price and the issuing company may fold as a result.

Since bitcoin is not a company and does not need money in the first place this process can be repeated again and again.  It does not hurt bitcoin but is a brutal game for those who fancy themselves as "investors".

[RyNinDaCleM]

The pump initiator will also spend days or weeks accumulating at or below the initiation point, so what they initiate the pump with is disposable compared to what is dumped. The remaining active whales are always profitable in this market. They wouldn't have become whales, or continue to be whales if they weren't.

[Pecunia non olet]

It's not panning out like this anymore. Pumps go wrong. Too many experienced people now.

[tokeweed]

Why does the price go back to the point before the pump?

If a pump and dump is occurring then surely the one who initiated the pump was not the only one who bought on the up trend. They simply initiated the pump and fanned its flames. Other buyers would buy on the up trend too. Then the initiator does a dump - but they possibly cannot bring the price back down to what it was when the pump started (without making a loss) because they would have to sell more than what they bought.

So why does the price go back to the starting point?

Because the people (the majority) who bought lots at the top or near it (out of greed and fear of being left behind) realizes what's really going on (that they are a victim of hype), and then proceeds to dump everything at market prices.

The good news is the same thing works over and over.  It's just they way markets are. But timing it is close to impossible.

[ensurance982]

It's mostly that people don't 'buy' or 'trust' the pump. They rather use the chance of entering a short position at a higher point. It's quite sad, yeah ^^'

Then who is making money and who is losing it?

Well, if you succeed in creating a pump (or a dump) then people may be tricked into buying/selling into your walls. Which are set higher/lower (respectively) than where the price was before the pump/dump. Profit.