#数字资产市场动态 The common pitfalls in the crypto world: Do you really understand the concept of shakeouts?

There's a clear point to be made— the true goal of the market maker's shakeout is never about the chips you hold.

Having observed the market for many years, I see the most common scenario is retail investors seeing a decline and immediately blaming the "black hand," convinced that the market maker is targeting their holdings. Honestly, this kind of thinking is purely overthinking.

The core purpose of a market maker's shakeout is only one: to clear obstacles for a smooth rally and distribution later on.

Let's take a small coin as an example. Starting price at 1.3U, circulating supply of 12 million coins, retail investors hold about 70% of the chips, while a certain private fund has bought 3.6 million coins but hasn't moved them. I was quite puzzled at first, but then I realized—if they were to push the price directly and roughly, at around 1.6U, retail investors would definitely start dumping. The private fund's limited capital can't absorb that much selling, so they would be forced to sell down. Therefore, a shakeout is necessary first.

A shakeout usually involves three stages, each carefully designed to manipulate retail investor psychology.

**Stage One: Gradual decline to wear down confidence**
The price drops 2%-3% daily, trading volume remains dull, no positive news, and retail investors start to panic, thinking it's the end. They begin to sell off. At this point, the market maker gently absorbs 500,000 coins between 0.95U and 1.0U. It looks like a minor bottoming process, but in reality, it's quietly changing hands.

**Stage Two: The trap of sharp dip and rebound**
The coin price suddenly plunges to 0.75U, then bounces back to 1.0U. Retail investors see the rebound as a buying opportunity and rush in. But then the price breaks through previous lows, dropping to 0.68U, trapping those who bought in, forcing them to cut losses.

**Stage Three: Creating panic through rumors**
They start spreading unreliable news—saying the project team has run away, big investors are dumping, or the team has disbanded. The price is pushed down to 0.52U. By now, retail investors have lost about 60% of their capital and are forced to sell. The market maker easily absorbs 6.2 million coins at this price range, between 0.5U and 0.55U.

The essence of a shakeout is actually "changing hands"—exchanging low-cost retail chips for long-term investors, so that when the price is later pushed up, the selling pressure is much smaller.

Remember this logic: next time you see a sharp decline, don't rush to blame. It might just be the prelude to the next rally. $ETH $BTC market movements have always been like this.

Surviving in the market requires staying clear-headed.