Mistakes made by several amateur market-making teams:
1. Retail investors suddenly FOMO (Fear of Missing Out), and the team sees natural liquidity coming in, concentrating on one price to aggressively sell off. All retail investors enter at the same price, and then when it reaches the price that doubles their investment, it becomes a huge resistance level. When it hits that price, retail investors sell off, and the team has to pay additional costs to support the price. (Too many shares are released in the early stages, which could have supported a market cap of 100 million, but the upper limit was forced down.)
2. After retail investors FOMO and buy in, the team is reluctant to sell, and then after a 10x increase, the retail investors themselves drive the market down. The firm did not capture liquidity during the upward trend and has no funds to support the price when it drops.
3. Treating hot narratives as long-term narratives, when the traffic comes in, they not only do not run but also support the price, only to be smashed by retail investors.
4. Wallets are too easy to track, and they do not wash their wallets. The buy and sell points of the market makers are crystal clear; they can even calculate your support cost price. A bunch of traders are there taking your liquidity in waves, and your holders see that the wave traders are making money. The impatient ones also join the wave army, and when you pull the price up, a large number of retail investors sell off, ruining the market. (A good market maker should be able to punish wave traders.)
5. Overconfidence in capital strength leads to continuous upward movement without any pullbacks, allowing retail investors who are on board to be too comfortable, with little turnover. All are at 5-10x #BTC上攻11万？ #币安Alpha公布第6批项目 #币安LaunchpoolBIO , and once the market weakens and a downtrend begins, the market is instantly trampled and destroyed by retail investors. What market makers need to do is guide sufficient turnover, allowing everyone's average cost to increase, stabilizing the market step by step.