The rapid growth of interest in the DeFi sector also served as fuel for various scams in 2023 when over 54% of all ERC-20 tokens displayed signatures characteristic of a typical PnP scheme. One weapon against these issues is a pump screener at WunderTrading.
Let’s talk about the growing danger of PnP assets. It is important for all capital holders interested in building wealth through crypto to understand how to detect these fraudulent activities and invest in reliable digital assets. Alternatively, you can try to take advantage of an upcoming price hike.
How pump-and-dump schemes work
It is quite easy to identify a PnP situation in any market. When it comes to cryptocurrencies, the task becomes slightly more difficult compared to stocks, where it is easier to identify assets issued by no-name companies. The inherent volatility of highly speculative digital assets makes it hard to spot unnatural behavior, while the fast pace of financial activities may downsize the window of opportunity to react to a potential price crash.
Here are some events that may tip you off about pumping:
● Volume spikes in crypto trading are abnormal when they happen without any reason. If you have not seen heated discussions about digital assets or protocols issuing them, any large increase in volume should be a warning sign that you do not want to ignore. Any unprovoked spike in volume is an indication of price inflation or insider trading.
● Order book imbalances are a very telling sign. If you see way too many buy orders without any activity in the opposite direction, it is often a signal to bail out. A healthy market does not behave like this. Usually, orders are in proper balance, with bulls fighting against bears as they should. When there is a notable discrepancy, you must proceed with caution.
● Suspicious social media crypto signals proliferating from obscure Discord channels or free signals telegram groups without any real following are precursors of a PnP scheme. If you see way too much chatter on social media with unknown influencers praising digital assets of questionable origin, it is a good idea to stay away and observe from a safe distance.
● Unusual price action changes. Digital assets can have very high volatility. For instance, Bitcoin reaches 60% monthly volatility with an impressive level of consistency. However, price action movements are tied to notable events in the global economy, local markets, and regulation. If the price goes up without any particular reason, you are likely looking at a fraudster inflating the perceived value of a token.
In some cases, even promising tokens may be targets for PnP schemes. We have to remind you that fraudsters do not have to launch new assets or actively participate in the development process. They find projects that show some promise, artificially increase the price, and sell tokens, leaving others to hold the bag.
Among various risks in cryptocurrency trading, the danger of falling for a PnP scam is one of the most concerning for newcomers who do not know the specifics of the crypto ecosystem and do not do their due diligence well enough to protect themselves from fraud.
Avoiding crypto scams
Prevention is the best way of dealing with this risk. While it is possible to mitigate losses by using various instruments like delayed orders on open positions, it is much better to simply never step into a trap.
Here are some tips for newcomers who want to explore the exciting world of digital assets safely:
● Avoid shady projects. A team of developers aspiring for success in the crypto ecosystem will offer full transparency by revealing the identities of team members and building a protocol as an open-source solution that can be verified by others. When the team behind the project you like is secretive, it is a warning sign.
● Continuously keep tracking volumes. As mentioned previously, a sudden sharp spike in volume often indicates an ongoing pumping event. It is important to use various tools to track this metric. For instance, you can set up an alert on TradingView to instantly receive a message when something fishy is happening in the market.
● Do not trust social media influencers. The motto “DYOR” or “Do Your Own Research” exists for a reason. Protecting crypto investments is the job of an investor. You should never blindly trust any individual telling you where to put your money. If there is a person with many followers who cannot stop talking about a token that they are buying, it is almost always a scam.
● Learn the history of crypto market manipulation. There is nothing better than learning from your mistakes. The second best thing is learning from the mistakes made by others. It is hugely important to read as much as possible about various forms of fraud that happen in the world of crypto. Unfortunately, you will hear many sad and tragic stories. Let them be a lesson.
● Invest with platforms that have good track records. WunderTrading is an excellent destination for many newcomers to the cryptocurrency market. This platform is partnered with tried-and-tested centralized exchanges (Binance, OKX, and many others) while offering an incredible product allowing you to detect scams and engage with the blockchain industry safely.
These simple tricks will help you dodge many bullets, but you will also need reliable tools that will make the journey even safer. Thankfully, we have a variety of instruments to identify fraudulent activity. One of these top pump detection tools is the highly specialized signal bot by WunderTrading, accessible by all users of the platform. It is a great tool for smart investors who want to make money without worrying about being scammed.
Using automation to spot scams
This product is available to all users of the platform who have a paid subscription plan. You can use it right away without any hidden commissions and additional payments. The detector works all the time and sends alerts to users who are using it.
It is a great addition to the rich arsenal of instruments that can be easily accessed by all users of the WunderTrading platform. While the vendor is primarily focused on building efficient tools for automated trading systems, the variety of complementary products is incredible. It allows users to stay safe, diversify investments, and create passive income streams.
Features of the product
Proactive trading can be quite dangerous for newcomers who do not have any experience with financial markets. Unfortunately, close to 60% of all holders of cryptocurrencies have never before engaged with financial instruments like stocks or bonds. Entering the market for the first time can be an exciting event for a beginner, but the consequences of poor decisions catch up later when the initial euphoria is over.
When prices shoot to the sky, it feels good at the start. When prices are rising and new investors are joining the party. However, when it suddenly crushes to nothing after a massive sell-off, all those holding the bag feel the pain quite vividly.
Detecting and preventing fraud is the best course of action. The pump detector is a great tool for this precise task.
Here are some of its features and capabilities:
● Broad data collection. The robot collects information from a variety of centralized exchanges to identify when something suspicious is taking place. It uses a wide range of analytical approaches to process the data and identify patterns that may indicate a pumping event.
● Customization. Users with experience may have their own ideas about the market and PnP situations. It is possible to use custom alerts that will go off when the price changes by a certain percentage or volume increases sharply.
● User-friendly interface significantly reduces the difficulty of the onboarding process. You will see all the data comprehensively packed into a neat dashboard. The controls over signals are intuitive enough for a complete newbie to master in a couple of minutes.
● Actionable insights. All signals produced by the autonomous system can be immediately used to trigger robots that execute algorithms on CEXes. If you want to take advantage of PnP schemes, signal bots are one of the most efficient ways to do it.
● Crypto investment protection. All robots that can be triggered by this system are adjustable. Users can set limits to position sizes, set up delayed orders (stop losses and take profits), and fine-tune parameters according to their preferences and risk styles.
The system is tracking all the data and how it changes in real time. It is a great instrument for many contemporary crypto enthusiasts who want to stay safe while investing proactively in the growing digital ecosystem. If you do not want to swap assets on CEXes with the help of smart cryptocurrency trading bots, you don’t have to, but it is a good idea to keep the screener open at all times to avoid risky decisions.
How to use the screener to detect PnP schemes
The main method is setting up alerts for when volumes spike sharply by a certain percentage within a short period. Alternatively, you can use price action changes as a gauge for the riskiness of entering a market position. The platform allows you to use both indicators simultaneously.
When volumes and prices change quickly, it is a good idea to take a breather and analyze the current situation. Even in the most volatile markets, you will always have some time to think through all potential decisions.
One of the best features of this particular system is that it can track a multitude of assets at once. Users can set the number of simultaneously tracked digital assets and receive notifications about notable changes in their market situations.
The product in question is an excellent signal bot that can be used by all newcomers and veterans to avoid various risks associated with PnP, scams, and questionable digital assets. At the same time, it allows users to capitalize on inefficiencies that pop up into existence when someone is artificially inflating the value of a target asset.
The main takeaway
WunderTrading has developed one of the best tools for users who are interested in tracking the crypto market and avoiding dangerous digital assets. If you want to create a balanced portfolio that performs under all sorts of market circumstances, it is a good idea to utilize the full range of tools offered by WunderTrading, including AI-powered statistical arbitrage system, the copy trading marketplace, and the tool we’ve been discussing!
