Pumpmental is a term that combines the words “pump” and “fundamental”.
It refers to factors that can cause a rapid increase in the price of a cryptocurrency.
These factors are mostly marketing-driven and do not reflect the true value or quality of the project.
Scammers or speculators can use pumpmentals to manipulate the market and profit from unsuspecting investors.
What is Pumpmental? Factors that Contribute to pumpmental
- Influencers or VC involvement
- Narrative – Product Fit
- Cult Leaders
- A hot Ecosystem + Ecosystem Funds
- A fanatic community
- Marketing Stunts
Influencers or VC Involvement
Influencers can create hype and awareness about a certain crypto project or coin, which can attract more investors and traders to buy or sell it. This can cause a sudden surge or drop in the price, depending on the sentiment and direction of the influencer.
The price of Dogecoin increased by 27% when Elon Musk changed the Twitter logo Dogecoin logo. This explains to you how much an influencer can influence pumpmental.
VC involvement can provide funding and resources to crypto projects or startups, which can help them develop their technology, expand their team, or scale their operations. This increases the value and quality of the project, as well as its credibility and reputation in the market.
Reputable VCs like Binance, a16z, Paradigm, etc, give investors a high level of confidence in any project they fund. This is because the previous projects, such as Compound, Uniswap, MakerDAO, 1inch, etc, they’ve invested in have done well and provide value in the crypto industry.
Some investors no longer have to spend time and money on in-depth research. They just have to check a few things and then invest in these coins when they have a token.
VC involvement also creates network effects and strategic partnerships, which boost the adoption and innovation of the crypto project or coin.
Narrative – Product Fit
Narrative – Product Fit is a concept that describes how well a crypto project or coin aligns with the prevailing or emerging narratives in the crypto industry. Narratives are the trending ideas, stories, or beliefs that shape how people perceive and value cryptocurrencies.
With the introduction of AI, investors are speculating that AI and gaming will be the major narrative that will pump the crypto market come 2024/25. Just as DeFi was part of the narrative that pumped the crypto market in the 2021 bull run.
A crypto project that has a strong Narrative – Product Fit can benefit from the pumpmental effect, which means that it can experience a rapid increase in its price.
In contrast, a crypto project or coin that has a weak Narrative – Product Fit can suffer from the opposite effect, which means that it can experience a rapid decrease in its price due to factors such as negative publicity, changing narratives, or regulatory actions. These factors can erode the confidence and trust of investors and users in the project or coin.
Facebook’s Libra (now Diem) is an example of a crypto project that has a weak narrative – Product Fit with the decentralization and privacy narratives, which have faced strong opposition and criticism from regulators and the crypto communities.
Cult Leaders in Crypto
Cult leaders influence pumpmental by using their charisma, authority, and persuasion to attract and manipulate followers into buying or selling specific cryptocurrencies.
They create a sense of loyalty, devotion, and exclusivity among their followers, who may believe that they are part of a special or superior group that has access to secret or privileged information.
Cult leaders can also exploit the fear, greed, or curiosity of their followers, who may be willing to take risks or make sacrifices for the sake of the cult leader’s vision or agenda.
Some examples of cult leaders who have influenced pumpmental in crypto are:
Craig Wright, who claims to be Satoshi Nakamoto, the anonymous creator of Bitcoin. Wright has a loyal following of supporters who believe that he is the true inventor of Bitcoin and that his version of Bitcoin, Bitcoin SV, is the original and legitimate one.
Justin Sun, who is the founder and CEO of TRON, is known for his aggressive marketing and publicity stunts, such as buying lunch with Warren Buffett, announcing partnerships with major companies, and launching giveaways and contests.
Sun has a large fan base on social media, who often praise him and promote his projects.
Richard Heart, who is the founder of HEX, is a controversial figure who has been accused of running a Ponzi scheme, scamming investors, and plagiarizing code. Heart has a charismatic personality and a cult-like following of supporters who defend him and attack his critics.
A Hot Ecosystem + Ecosystem Funds
First, a hot ecosystem is a network of users, developers, platforms, and services that support and promote a specific crypto project or coin.
A hot ecosystem can increase the adoption and innovation of a crypto project or coin by enhancing its value proposition and network effects. For example, Ethereum has a hot ecosystem that supports various applications and protocols built on its blockchain, such as decentralized finance (DeFi), non-fungible tokens (NFTs), and stablecoins.
A hot ecosystem generates hype and awareness about a coins within its ecosystem c, which can attract more investors and traders to buy or sell it, depending on the direction of the hype.
For example, Solana has a hot ecosystem that has received a lot of media attention and social media buzz, which contributed to its rapid price appreciation during the 2021 bull run.
An ecosystem fund provides funding and resources to crypto projects or startups that are part of the ecosystem, which can help them grow their technology, team, or user base. This can increase the quality and credibility of the coin, as well as its potential returns for investors.
An ecosystem fund can create strategic partnerships and collaborations within the ecosystem, which can boost the adoption and innovation of the project or coin. For example, Binance has an ecosystem fund that supports projects that integrate with its smart chain platform and exchange services.
A Fanatic Community or Maximalist.
A fanatic community is a group of loyal and passionate followers who believe in the vision and mission of the coin and who are willing to promote, defend, and contribute to it. As a cryptocurrency continues to stay longer and achieve more success, the more fanatics some community members become. We have Bitcoin Maxi, Ethereum Maxi, ADA Maxi, Solana Maxi, BNB Maxi, etc.
A fanatic community provide valuable feedback, suggestions, and ideas to the project developers, which can help them improve their technology, features, or services.
For example, Bitcoin’s community has been instrumental in proposing and implementing various upgrades and innovations to the protocol, such as SegWit, Lightning Network, and Taproot1.
A fanatic community can also create positive word-of-mouth and viral marketing for the project or coin, which can attract more investors, users, and partners to join or support it.
For example, Dogecoin’s community has been known for its meme culture, social media user-generated campaigns, and charitable donations, which have boosted its awareness and adoption.
A fanatic community can also create a network effect and a sense of belonging for the project or coin, which can increase its value and utility. For example, Ethereum’s community has created a vibrant ecosystem of decentralized applications (DApps), L2s and tokens that run on its blockchain, which have enhanced its functionality and interoperability.
Marketing stunts are usually unconventional, surprising, or controversial actions that are designed to generate buzz and media coverage.
The Shiba Inu (SHIB) coin, which was created as a joke and a parody of Dogecoin, gained massive popularity and value after Elon Musk tweeted about it and Vitalik Buterin donated billions of dollars worth of it to charity.
The CryptoPunks NFT project was one of the first and most influential NFT collections on the Ethereum blockchain. The project used marketing stunts such as giving away 10,000 NFTs for free, creating a physical art exhibition, and collaborating with celebrities and brands.
All these can lead to the pump of a cryptocurrency. However, if you don’t position early when the coins are still low, you cannot make money from it.
Nathan Rothschild said, “buy when there is blood in the street.” People often miss buying when there is blood in the street because they are afraid of losing their money.
But they forget that the higher the risk, the higher the reward. When this pumpmental happens in a coin, that’s the wrong time to buy. If you eventually buy, you will become the exit liquidity of people who bought early.
If you want to know when to buy a cryptocurrency and several strategies to increase your profitability in crypto, you need to get this book.