This tactic is employed by influential investors, or "whales," who possess enough capital to influence market dynamics in their favor, here's how they typically execute this strategy:
1. Sell-off: A whale triggers a significant sell-off, causing widespread alarm among smaller investors. Seeing the price drop sharply, traders retailers are beginning to shed their assets, fearing further losses.
2. Domino effect: As more investors rush to sell, downward pressure intensifies, leading to a sharp drop in prices. This panic-induced selling creates a snowball effect, driving the market even lower.
3. Reaccumulation: Once the market has bottomed and prices are low enough, the whale re-enters and buys assets at a discount.
This move restores market momentum and allows them to increase their holdings.
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