| What tends to actually happen in the altcoin pump and dumps (None of the Twitter pumpers do BTC or even LTC since it would take too much money): The pumpers build a position in a selected altcoin. They do this slowly, over a period of time, hoping that no one will notice. Only once they are satisfied with their position do they announce their "pump". They broadcast the idea of "pumping" that coin by a massive coordinated buy. The masses intend to buy in, bidding up the price and then selling off at the higher price. The problem is that the people coordinating the pump already have their coins. And so as the people they recruited are buying, they're buying coins from the coordinators. When that activity starts to taper off, the coordinators will dump whatever they have left, completely trashing the price, often below the starting point. So the coordinators are the only ones who benefit at all. There's various tricks they also use to make it more convincing, with bid walls and talk of "noob traps", but at this point it's happened so often that willing dupes are getting hard to find. Most pumps these days barely move the price at all. Fontas is so infamous that his pump announcements often result in the price immediately going down. Almost all this activity is on one exchange, BTC-E, which is the only exchange with a variety of alt-coins and the volume for a pump n dump. There have been attempts to get them going on Cryptsy, with its much wider variety of alts, but that site is so awfully coded that it runs too slowly to allow for any sort of coordinated activity. There have been rumors that there are less public groups running pump and dumps on BTC, which would require substantially more money at this point. There's also clear signs of "dump and pumps" on BTC, where someone will sell a large amount of BTC in hopes of causing a price avalanche, and then they will buy in at the resulting cheaper price. Given the amount of money to be made, those are almost certainly true rumors. Having said all that, I think some of the smaller pumpers on Twitter are just looking to drive the price up on certain coins, I don't think they're necessarily looking to take advantage of their followers. |
That could be a useful trick. If you know you can consistently reduce prices, and have the capital to acquire the now cheaper commodity. Announce the scheme, prices drop, buy in. Wait for prices to recover and sell off for a profit.