Let’s explain these concepts using a relatable example — selling potatoes 🥔.
1️⃣ Market Hype:
Imagine one day, a rumor spreads about an upcoming fast-food fair where participants can compete to become the best french fries 🍟 chain in the city. Excited by the opportunity, people rush to buy potatoes, causing demand to surge. With limited supply, potato prices skyrocket.
2️⃣ Price Manipulation (Syndicate):
Sensing an opportunity, some greedy traders hoard large amounts of potatoes and resell them at even higher prices. This artificial price inflation is driven by the so-called "potato syndicate." Prices rise by 60%.
3️⃣ Market Correction:
The government investigates and reveals the total supply of potatoes, exposing the manipulation. Once the true supply is known, the market "corrects" itself, and prices drop by 10%. This is a market correction — a natural price adjustment after an overinflated surge.
4️⃣ Market Pullback:
A day later, potato sellers from other regions flood the market to take advantage of high prices. The increased supply leads to a 25% price drop. This short-term drop is a market pullback, often seen as a temporary dip in a larger upward trend.
5️⃣ Market Crash:
The government suddenly announces the import of potatoes from China. Fearing an oversupply, prices plummet by 50%. This sharp and dramatic decline is a market crash — a severe drop in prices caused by panic or a major event.
6️⃣ Market Scam:
Eventually, someone uncovers that the fast-food fair announcement was fake. As news spreads, confidence collapses, and potato prices crash to nearly zero. This represents a market scam, where false information misleads investors, leading to heavy losses.
Which Indicator Fits the Current Bearish Move?
Considering the sharp and significant decline, it most closely resembles a market crash, where a major event or news triggers panic selling, leading to a steep price drop.
