Dump

Dump refers to the act of selling a large amount of an asset, usually a cryptocurrency, in a short period. This sudden sale can lead to a significant drop in the asset’s price, causing panic selling among other investors.

How a Dump Works

In the context of cryptocurrency, a “dump” typically occurs when large holders, known as “whales,” decide to sell off their holdings at once. This creates downward pressure on the price, which can lead to a cascading effect as smaller investors panic and sell their assets to avoid losses.

Impact of a Dump

A dump can significantly affect market prices, causing volatility. While some traders might see it as an opportunity to buy at lower prices, others may be caught in a downward spiral. The aftermath can lead to short-term market instability.

Why It’s a Concern

The potential for price manipulation and market instability makes dumps a concern in the crypto world. Protecting against such events is essential for maintaining a fair and efficient market for all participants.