Bitcoin Cash Trading Pump & Dump – Smart BCH Exchange Tips?

The Bitcoin Cash Pump and Dump Scheme

Trading in any Financial market can be a dicey affair. In the cryptocurrency market, the risk is all the more pronounced due to heightened volatility owing to its decentralized nature and lack of regulatory authority. However, greater risk can also yield greater reward.

Speculative traders with limited knowledge of market behavior tend to incur untold losses. Smart trading techniques can greatly mitigate losses. To be a smart trader, it is first required to understand various market trends in the short, medium and long term and hedge one's bets accordingly.

The Pump and Dump scheme

Pump and dump, a popular trading scheme featured in movies such as ‘The Wolf of Wall Street' is the act of artificially creating a secondary bull market (Pump) for a stock/currency through misleading propaganda, often carried out via social media channels, with the intention of selling off the stock/currency (Dump) after tricking traders and investors into buying the stock/currency.

In the traditional market, Pump and dumps are highly illegal and can land the perpetrator behind bars or slapped with huge fines. Cryptocurrencies operate in a decentralized marketspace, therefore participants in cryptocurrency markets are required to be on the qui vive to safeguard themselves from such schemes.

How to spot a Pump and Dump scheme?

Any sudden, inexplicable bullish behavior is usually an inorganic secondary market trend. These are known as ‘small caps' without support levels to sustain the upturn.

Following the market late in such a scenario is ill-advised. Smart traders usually go against mass market behavior in such events, i.e, trading in the opposite direction, thereby ‘outsmarting' the perpetrators of the Pump and dump scheme.

This week's movement of Bitcoin Cash (BCH) perfectly exemplifies a Pump and dump scheme. Within 24 hours, BCH rampantly surged from $350 to beyond $2000, causing many a weak hand to fall prey to a trick believed to have been carried out by a clique involved with far-east mining farms. More than 3/4th of the trading was conducted in South Korean exchanges (KRW to BCH).

According to a paste from an inside source dated July 30, 2017, which was posted to Pastebin (, Jihan Wu, co-founder of BITMAIN, whose mining pool, Antpool, holds the largest hashrate among mining pools, and a few other had colluded to perpetrate this given the right opportunity.

As the cancellation of SegWit2x sowed uncertainty, amidst a situation of a somewhat uneasy compromise within the network, the right opportunity presented itself. Given that the perpetrators also controlled a significant amount of Bitcoin's hashrate, they were also able to further destabilize Bitcoin by switching their hashrate to mine BCH, which would then lead to a backlog of unconfirmed transactions in the Bitcoin blockchain further fueling their propaganda against Bitcoin.

This was all very carefully orchestrated every step of the way and ended up costing a lot of traders dearly. Be advised that there may yet be another spell to come. Be a smart trader!

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