This is when persons manipulate developments of a certain token that they are interested in, as most tokens are marketed as being utility based it is simple to manipulate the market. To understand how this works it is imperative how utility and
xceltoken.com works and affect the economy.
Utility, according to economists is the measure of happiness, enjoyment or a sense of security that a person receives from a commodity or a service in comparison to many other commodities. Utility is basically seen as a measure of the value of one particular commodity, for various different people. In economics it is usually assumed that an individual is rational, if utility is maximized in their care about money and life, that is to say that if an individual chooses one particular commodity from among many such in a group, the rationality of the individual is based on whether his option outweighs the rest in propelling their satisfaction. For example: if Sarah is given a choice between having soup or salad for lunch, Sarah’s mind immediately compares the value of each of these lunch options and quickly decides to have salad, which would give Sarah the satisfaction that she’s looking for from her lunch. Do bare in mind that there is no real measurement system outside of a theoretical framework.
Now with the understanding of how Utility functions, Let’s move on to the next part of the economic term (Utility Token)- Tokens, is essentially a metal coin or plastic disk that is used instead of money. (Disk, Cambridge Dictionary), or it is something that is given to someone with an intent to express an intention or a feeling (symbol, Cambridge Dictionary). For
example: a token could be a piece of paper or plastic token that kids collect at an arcade or it could be a rose given to a person with the wish of expressing feelings, for them.
The said set of individuals meet in groups and pump money into a value that subsequently increases. Unsuspicious traders see this increase and invest as well. The price continues to rise within a very short time frame. Then, the manipulators dump their coins and the price crashes.
On the one hand this is illegal and on the other it’s only possible in markets with low volume. There are many cryptocurrencies where you can push the course with investments as little as 30,000 euros.
On average, every small utility token is becoming the target of a targeted pump & dump every three months. Within a few minutes, the price increases by 30 to 1,000 percent and then falls back to the early level within seconds. Day-traders can try to spot pumps by themselves or by joining unlawful groups to find out about the pumps beforehand.
