Meme Coins: What’s Behind the Curtains ?Have you ever wondered how meme coins keep pumping? Are people really getting rich from them?
How the Pumps are Made ?
Step 1: Establishing Credibility
First, the creators spend significant investment capital to demonstrate good credibility. This ensures that the strongest platforms list them. During the Initial Public Offering (IPO), coins are sold massively to investors. However, as their is no more buyers, prices begin to decline.
Step 2: Accumulation Phase
Next, the coin enters an accumulation phase where big whales start buying from bored speculators at the lowest prices. The whales objective during this phase is to accumulate the maximum quantities for the lowest price possible. The long accumulation time will breakdown the enthusiasm of the speculators , selling their coins for a loss or no profits.
Step 3: Controlling Supply and Demand
When accumulation reaches its peak, the whales start withdrawing their coins from the platform, leaving the market with small quantities. They then inject a significant amount of capital, such as $1 million, causing the price to take off.
Step 4: Advertising
Following this, the coin creators and whales invest heavily in advertising , attracting a big community and more investors. This new crowd keeps injecting liquidity into the pumps, leading to noticeable price increases.
Getting Rich Quick?
Can you get rich quick from meme coins? The reality is nuanced. Even if speculators buy at the bottom, their investments are often too low, leading them to sell at modest gains during the pumps. On the other hand, people who buy after a 1000% increase are typically looking for substantial returns. However, their small capital makes even a 5x return seem insufficient.
The meme coin trend is aggressive and driven by a powerful crowd. While investing in these coins can bring profits, it’s essential to remember that you are always at the mercy of the whales. If they decide to sell off, the market can crash just as quickly as it pumped. Therefore, caution and awareness of the market dynamics are crucial when dealing with meme coins.
