After spending a long time in the crypto world, every time the price drops, retail investors start to complain loudly, saying that the whales are deliberately trapping their small holdings. But this understanding is actually way off the mark.

Whale shakeouts are not about grabbing your chips; frankly, they are paving the way for subsequent price increases and distribution.

Let's take a real case of a small-cap coin. The initial price was $1.3, with a circulating supply of 12 million coins, and retail investors held nearly 70%. A private equity fund entered and bought 3.6 million coins but remained inactive. Do you know why? Because if they pushed directly, when the price rises to $1.6, retail investors would definitely start selling en masse. That small amount of private capital simply couldn't withstand the pressure, and it would end up as a "pump and crash" tragedy.

So, whales have to play some tricks. Usually, it happens in three stages.

**Stage One: Gradually Bottoming Out.** The price drops 2%-3% daily, trading volume is dead, and there’s no significant news. Retail investors start to panic, thinking the coin is doomed, and many start selling off and fleeing. The whales quietly accumulate between $0.95 and $1.00, swallowing 500,000 coins in one go.

**Stage Two: A Sudden Drop Trick.** The price suddenly plunges to $0.75, then bounces back to $1.00. Retail investors see this pattern and think it’s a bottoming opportunity, rushing in. But within half a day, the price is hammered down through that level, dropping to $0.68. Latecomers get trapped and can only cut losses.

**Stage Three: Creating Panic.** Rumors start flying—project teams withdrawing liquidity, big players dumping, even fake evidence of team disbandment. The price falls all the way to $0.52, with retail investors losing nearly 60%, rushing to clear their positions. Meanwhile, the whales buy another 6.2 million coins between $0.50 and $0.55.

In essence, shakeouts are just "replacing chips." Whales clear out the retail investors prone to panic selling and replace them with institutional investors who can hold. This reduces selling pressure during the next rally, allowing the price to rise smoothly.

So next time the market crashes, don’t rush to curse. It might just be the calm before the real upward wave.