How to Spot a Crypto Pump-and-Dump and What to Do If You Get Caught in One

Crypto pump-and-dump schemes are as old as the market itself, but they’ve become more polished, faster, and harder to spot. Knowing the warning signs can save you money — and knowing how to react can limit the damage if you’re already in one.

Red Flags That Signal a Pump-and-Dump

The first giveaway is sudden hype without substance. If a low-cap coin starts trending on Telegram, X, or Discord with promises of “guaranteed pumps,” “insider info,” or countdown timers, be cautious. Legitimate projects don’t rely on urgency or secret groups.

Another sign is thin liquidity paired with sharp price spikes. Pump-and-dumps often target tokens with low trading volume, making it easy for a small group to push prices up quickly. You’ll often see long green candles followed by rapid pullbacks.

Watch for vague or recycled narratives. If the project’s roadmap is unclear, the team is anonymous, or the website looks rushed, chances are the hype matters more than the product.

What to Do If You’re Already Caught

First, don’t panic. Emotional selling at the bottom often locks in the worst outcome. Check liquidity and volume — if exits are still possible, reducing exposure gradually may be smarter than waiting for a miracle bounce.

Avoid doubling down. Many investors lose more by “averaging down” on a manipulated asset. Accepting a smaller loss is better than chasing a recovery that may never come.

Finally, learn and adjust. Use position sizing, avoid hype-driven entries, and always ask: Who benefits if I buy right now?

Bottom Line

Pump-and-dumps thrive on excitement and fear of missing out. Staying skeptical, slowing down decisions, and focusing on fundamentals are your best defenses. In crypto, patience protects capital — hype rarely does.