A common phenomenon in the market is that large capital flows are uneven, leading to intense price fluctuations over several months. And then? It often completes a mean reversion.

This process is essentially wealth redistribution. Early entrants and bottom-fishers have a much lower cost basis than those who chase the high later on. When the market repeatedly oscillates at a certain price level, this asymmetry becomes increasingly apparent. Once the market finds a balance point and the concentration of holdings reaches a critical threshold, a rapid mean reversion occurs—some sell at a loss, others take profits, and retail investors in the middle often become stepping stones for the larger trend.

Therefore, understanding the cycle of wealth misallocation means you understand half of the crypto market.