5 Signs a Crypto Project Is About to Dump

Every dump looks obvious in hindsight. "How did people not see that coming?" Easy to say when you're looking at a chart that's already gone to zero. Much harder to call in real time when the Telegram is buzzing and the price is still green.

But there are patterns. After watching hundreds of token crashes over the past few years, I've identified five warning signs that show up consistently before major dumps. Not every project that shows these signs will dump. But every project that dumped showed at least two of these signs beforehand.

Sign 1: Insider Wallets Are Moving to Exchanges

This is the biggest tell and the easiest to verify. When wallets associated with the team, early investors, or VCs start transferring tokens to exchange wallets, something is about to happen. And that something is usually selling.

People don't move tokens to Binance or Coinbase to look at them. They move them there to sell. If you see team or VC wallets that have been dormant for months suddenly waking up and depositing to exchanges, that's your warning.

How to check this: Use Arkham Intelligence to identify team and investor wallets. Set up alerts for transfers from those wallets. If you see deposits to exchange addresses (which Arkham labels), it's time to reassess your position.

Real example: In November 2025, three wallets associated with a mid cap DeFi protocol's Series A investors deposited a combined 15 million tokens to Binance over a 10 day period. The vesting schedule had just unlocked a tranche. The token dropped 35% over the following two weeks as those tokens were sold on the open market.

The information was public. The blockchain is transparent. But most holders weren't looking.

Sign 2: Developer Activity Is Dying

A crypto project without active development is a crypto project that's dying. GitHub activity doesn't lie. If the team is still building, there are commits, pull requests, and code changes happening regularly. If they've given up, the GitHub goes quiet.

What to look for: Check the project's GitHub. Look at the commit frequency over the past 90 days. Compare it to the previous 90 days. If commits dropped by 50% or more, the team is either distracted, demoralized, or pivoting away from the project.

Also check who is committing. If it was previously five developers and now it's one person pushing minor updates, the team has shrunk. That's a bad sign.

The warning timeline: Development activity usually starts declining three to six months before a project truly dies. The price often stays stable or even rises during this period because the market hasn't noticed yet. By the time the market figures it out, it's too late.

Where to check: GitHub directly, or use tools like CryptoMiso which ranks crypto projects by GitHub activity. DeveloperReport.com also tracks developer engagement across the industry.

Sign 3: The Community Shifts from Product Talk to Price Talk

This is a subtle one but it's remarkably consistent. In healthy crypto communities (Discord, Telegram, Reddit), people talk about the product, the technology, and upcoming features. In dying communities, people only talk about price.

When the Telegram goes from "When is the V2 launch?" and "Just used the new feature and it works great" to "When pump?" and "Stop selling!" and "Devs do something about the price," the community has shifted from product users to bag holders.

Bag holders don't use the product. They just own the token and need it to go up. When the community is mostly bag holders, there's no organic demand for the product and the only thing supporting the price is hope. Hope is not a trading strategy.

How to gauge this: Spend 15 minutes reading the most recent messages in the project's Telegram or Discord. Count how many messages are about the product vs how many are about price. If more than 70% of the discussion is about price, that's a warning sign.

Also watch for how the team responds. If the team's communication shifts from product updates to "we're working on exciting partnerships" and "big announcements coming soon" without specifics, they're stalling. Teams that are shipping don't need to tease. They just ship.

Sign 4: Token Unlocks Are Approaching With No New Catalysts

I wrote an entire article about token vesting, but this point is so important it deserves to be here too. When a large token unlock is approaching (10%+ of circulating supply), and there's no positive catalyst to absorb the new supply, the price usually drops.

The logic is simple. If 50 million new tokens are about to enter circulation and nobody has a new reason to buy, those tokens are going to be sold into existing demand. More supply, same demand, lower price.

The dangerous combination: Big unlock plus no product update, no partnership announcement, no listing on a new exchange, no positive market condition. Just a wall of new tokens hitting the market with nothing to counterbalance them.

Where to check: TokenUnlocks.app shows upcoming unlock events for most major tokens. Compare the unlock size to daily trading volume. If the unlock is 5x the daily volume, the market probably can't absorb it without a significant price impact.

Timing: Prices often start declining one to two weeks before the actual unlock date. Smart money front runs the unlock by selling early, knowing that insiders will sell once their tokens are unlocked.

Sign 5: TVL or Usage Metrics Are Declining While Price Holds

This one catches a lot of people. A project's token price might be stable or even rising while its actual usage is declining. This creates a gap between price and fundamentals that eventually has to close. And it usually closes by the price dropping to match the declining fundamentals.

For DeFi protocols: Track TVL (Total Value Locked). If TVL has been declining for weeks or months while the token price stays flat, the price is likely going to follow TVL down. TVL represents actual capital committed to the protocol. Token price represents speculation. When speculation exceeds reality, gravity wins eventually.

For L1 chains and L2s: Track daily active addresses and transaction count. If these are declining while the token price holds, the network is losing users. The price isn't reflecting the reality yet.

For all projects: Track revenue if available. Protocols like Token Terminal show actual protocol revenue. If revenue is falling quarter over quarter, the token's valuation becomes harder to justify regardless of narrative.

Real example: A well known DeFi protocol saw its TVL drop from $900 million to $400 million between August and November 2025. The token price stayed roughly flat during that period because a few whales were buying the dip. In December, those whales stopped buying and the price dropped 45% in three weeks, finally catching up with the fundamentals that had been deteriorating for months.

What to Do When You See These Signs

Don't panic sell on a single warning sign. But when you see two or more of these patterns happening simultaneously, it's time to act.

Step 1: Reduce your position size. If you have a large allocation to the token, trim it. You don't have to sell everything. But reducing your exposure from, say, 10% of your portfolio to 3% limits your downside.

Step 2: Set a stop loss. If you're going to hold, at least define the level where you'll exit. "I'll sell if it drops below $X" is a much better plan than "I'll hold forever."

Step 3: Move profits to safety. If you're in profit, consider taking enough off the table to at least recover your initial investment. Then you're playing with house money and the emotional pressure disappears.

Step 4: Watch for confirmation or denial. Sometimes warning signs appear and the situation resolves positively. The team explains the wallet movements. Development picks back up. A new product launch absorbs the unlock. Stay objective. If the signs persist for two to three weeks with no improvement, trust the data.

Being early to a dump is worth more than catching the bottom. The people who sold at the first warning sign and missed another 20% of upside are still in a much better position than the people who held through a 70% crash because they were convinced it would bounce.

The data is there. The blockchain is transparent. The tools are free. The only question is whether you're willing to look at the uncomfortable truth before the price forces you to.