Many retail investors often misunderstand the role of shakeouts, believing they are just to grab cheap coins. But the truth is deeper: the real mission of a shakeout is to pave the way for the final distribution (selling phase). Letâs break it down đ
đ If a market maker pumps a coin directly from $1 to $2, it may look quick and efficient, but it actually comes with 3 huge risks:
1ïžâŁ Reluctance to Sell Effect đ
Early holders with big profits wonât sell, waiting for even higher prices. Meanwhile, outsiders are hesitant to chase after a coin that already doubled. This leaves the market maker stuck with fewer buy orders.
2ïžâŁ Concentrated Selling Pressure đŁ
If the price stalls, profit-taking will surge all at once. To maintain the uptrend, the market maker must burn huge capital, risking being trapped at the top.
3ïžâŁ Liquidity & Depth Issues đ
Especially in small-cap tokens, a rapid rise without turnover creates a âvolume-less increase.â Paper profits look big, but cashing out becomes nearly impossible without crashing the price.
đ„ This is where the shakeout strategy shines:
By repeatedly pulling back to areas like $0.9, weak hands exit, and new buyers enter at higher costs.
When price climbs to $1.5, fresh investors see only moderate profits and hold longer.
A breakout above $1 lures technical traders, adding fuel to the move.
â Result: The market maker successfully redistributes chips and sells into strength during the rally without killing the trend.