The Light coin experienced a wave of "plummet" market movement yesterday - it dropped straight from $4.8 to $0.8 in just one hour. It seems sudden, but behind it lies a systemic flaw in the crypto market.

The project team holds a large portion of the tokens but only puts a small part into circulation on the market. They choose to pump on smaller exchanges or certain DEXs, with the actual liquid spot possibly around the million-dollar range. Even more absurdly, they lock these spots with high APR, making the already thin liquidity even more fragile. Once all this is prepared, the AMM pricing mechanism becomes their puppet—moving a little in a small pool can lead to significant price fluctuations.

The current issue is that the size of the contract market is more than 20 times that of the spot market. Project parties can control the spot market at a very low cost, which allows them to manipulate the anchoring price of the entire contract market. With perpetual contracts having no delivery date and frequent funding rate settlements, the cost of holding positions against the trend is frighteningly high—some people lose their principal in just two days.

Traditional finance is constrained by regulation, and extreme manipulation will be curbed. But the crypto market is different; perpetual contracts have no expiration date, leverage is very high, and regulation is relatively lacking. Retail investors find it very difficult to win in this game because their opponents have very low costs. Most of the time, retail investors end up being the ones who take the losses. This market has opportunities, but the prerequisite is to remain calm.