Markets and Prices
A report compiled by researchers from Tel Aviv University, The University of Tulsa, and the University of New Mexico has found nearly 5,000 advertisements for cryptocurrency pump and dump signals on social platforms Discord and Telegram posted during the first half of 2018.
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Nearly 5,000 Ads For Crypto Pumps Posted to Discord and Telegram in First Half of 2018
A report examining the prevalence of advertisements for cryptocurrency pump signals across Discord and Telegram has found the phenomenon to be “widespread and often quite profitable.”
The authors collected five-minute interval price data for “nearly 2,000 coins across 220 cryptocurrency trading exchanges from Coinmarketcap” from mid-Jan. 2018 to early July 2018. “Pump data” was then obtained through “collecting messages posted to hundreds of dedicated Discord and Telegram channels using their APIs and manually labeling messages that signaled pumps,” and “consistently mapped to the trading data.”
In total, the researchers found 1,051 pump signals advertised on Discord and 3,767 ads on Telegram pertaining to more than 200 different cryptocurrencies.
The report asserts that the “proliferation of cryptocurrencies” and “changes in technology” have aided those who wish to conduct pumps, with a large number of the roughly 2,000 cryptocurrencies currently trading being “illiquid” and “characterized by very low trading volumes on most days, with occasional volume and price spikes.”
Twice as Many Low-Cap Pumps Promoted on Telegram Than Discord
The report describes the volume and market capitalization ranking of a coin as “the most important factor in determining the profitability of the pump,” adding that “pumping obscure coins (with low volume) is much more profitable than pumping the dominant coins in the ecosystem.”
The median price increase for coins ranked within the top 75 by market cap was 3.5 percent on Discord, and 4.8 percent on Telegram. For projects ranked from 76 to 200, the median price increase was 5.2 percent on Discord and 6.5 percent on Telegram. Coins ranked from 201 to 500 saw median gains of 5.3 percent on Discord and 8.1 percent on Telegram. Cryptocurrencies ranked below 500 produced median gains of 23.2 percent on Discord and 18.7 percent on Telegram.
Of the coins ranked in the top 75 by market cap, 52 saw pumps promoted on Discord and 56 on Telegram. Among projects ranked 76 to 200, 58 were pumped on Discord and 62 on Telegram. Of the cryptocurrencies ranked 201 to 500, 75 pumps were advertised on Discord and 84 on Telegram. Lastly, 80 coins ranked below 500 were pumped using Discord, while pumps for 176 lower-capitalized projects were promoted on Telegram.
The report notes that “January-July 2018 was a period in which cryptocurrency prices and trading volume were falling significantly,” emphasizing the success of the examined pumps despite the relatively moderate gains when contrasted with the 2017 bull market.
Do you think that we will see regulators seek to crack down on pump and dumps? Share your thoughts in the comments section below!
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