Having been involved in the crypto space for many years, I often hear retail investors complain—whenever the market dips, they start shouting at the "dog whales," convinced that the whales are just waiting to take their chips.

But this is actually a beautiful misunderstanding. Market makers' "shakeouts" are not aimed at retail investors' small coins; they are laying the groundwork for subsequent price increases and distribution.

**A real case can illustrate the point:**

A small-cap coin initially priced at $1.3, with a circulating supply of 12 million coins, held by retail investors who control nearly 70% of the chips. A private equity firm quietly absorbed 3.6 million coins, then stopped. Many people couldn’t figure out—why not just pump the price directly?

The answer is actually quite brutal. If they suddenly pushed the price up to $1.6, early retail investors would definitely start selling en masse. No matter how much capital they have, they can't withstand such selling pressure. In the end, it would just be "a pump that crashes," a futile effort. So, they must first clear out the retail investors.

**This clearing process usually involves three steps:**

**Step 1: Gradual Bottoming**

The coin price drops 2%-3% daily. It doesn't seem like much, but day after day of decline wears people down. Trading volume becomes extremely sluggish, and there’s no news. Retail investors become more anxious as they watch the chart, starting to suspect the project is doomed. Those who can’t hold back begin to sell off. Meanwhile, the whales quietly accumulate at the $0.95–$1.00 range, buying up 500,000 coins.

**Step 2: Sudden Spike**

The price suddenly plunges to $0.75—scary, right? But then it bounces back to $1.00. It looks like a bottoming opportunity, and many rush in. But within a short time, the price drops again, this time to $0.68. The bottom-fishers get caught deep, and finally have to cut losses. The whales continue to accumulate chips.

**Step 3: Creating Panic**

Market rumors start circulating—project team is removing liquidity, big players are dumping, even fake screenshots of team disbandment leak out. The price falls all the way to $0.52, with retail investors losing nearly 60%. They’re completely scared out, collectively panic-selling. Meanwhile, the whales steadily absorb 6.2 million coins at the $0.50–$0.55 range.

**In short, this is a "rebalancing" game.**

It’s about clearing out those with weak psychological resilience who are quick to sell, replacing them with long-term holders willing to hold steady. When the subsequent pump happens, selling pressure is greatly reduced, allowing the whales to smoothly realize profits.

So next time you see inexplicable sharp drops, don’t rush to curse online. It might just be the final preparation before a rally.