After years of struggling in the Crypto Assets market, I often hear investors complain about market makers manipulating prices when they fall, believing that their small amount of coins is intentionally targeted by the market makers. However, the strategy of Whipsaw in the market is far more complex and profound than this simple understanding.

To illustrate with a typical case: a small Crypto Asset GAMA, with an initial price of 1U and a total circulation of 7 million coins, of which retail investors hold more than 60%.

The project team has controlled 2.8 million coins at a low price, but they are facing a problem: when the price is directly raised to 1.3U, the selling pressure of early investors will be unsustainable, and they will eventually fall into passivity. Therefore, market washing has become an inevitable choice for them.

Whipsaw is usually divided into several key stages:

First, there is a slow decline with low trading volume. GAMA gradually falls from 1U to 0.75U, during which the trading volume is extremely low and market information is scarce. This leads ordinary investors to panic, believing that the project is about to collapse, and they hastily cut their losses to exit the market, while large funds quietly take the opportunity to collect chips.

Next is the whipsaw trap. The coin price suddenly plummeted to 0.55U, then quickly rebounded to 0.85U. Many people mistakenly thought the bottom had appeared and entered the market, only for large funds to suppress it again to 0.5U, causing this group of latecomers to be trapped, ultimately clearing their positions due to panic.

The third stage is to create market panic. Along with negative rumors such as "the project team withdrawing funds", the GAMA price further dropped to 0.4U. At this point, most investors were completely desperate, liquidating their positions entirely, while large funds seized this opportunity to accumulate low-priced chips.

The final stage is a V-shaped reversal. A small amount of capital is needed, and the price is pulled back to the 0.9U level. At this point, original investors dare not chase in due to fear, while new investors have their positions concentrated around the 0.9U level.

Through this series of operations, the holdings of large funds increased to 4.5 million coins, and the average cost was lower. More importantly, the floating chips in the market were significantly cleared, creating a low selling pressure environment for subsequent upward movements.

The essence of Whipsaw is actually a process of replacing market participants: filtering out those investors with low costs who panic easily and replacing them with stable funds that are not easily sold off during minor fluctuations.

Therefore, when you encounter a sudden market fall, instead of blindly blaming, it is better to understand that this may be a necessary preparation before a significant rise. Understanding this logic can help you maintain a clearer judgment amid market fluctuations.