When prices start to drop, most investors think that whales are 'catching the bottom'. I used to think that way too. But in reality, the way whales act is much more complex and sophisticated.
The first thing that a price drop affects is not capital, but psychology. When prices fall, traders' confidence is shattered. Leverage suddenly becomes frightening, many close their futures positions and switch to buying spot for a sense of safety. This shift is very important.
Buying spot helps absorb supply gradually, but at the same time, it removes liquidation pressure from the market. When fewer people use leverage, strong liquidity sweeps no longer occur. As a result, market liquidity becomes thin, and the order book weakens.
And this is when the whales start to act.
Whales never use all their capital at once. They patiently observe indicators like open interest, funding rate, long-short ratio. When fear engulfs and leverage decreases significantly, just a small amount of capital is enough to move the price.
At this point, whales will use a small portion of capital to gently push the price up. The purpose is not to create a real uptrend, but just to test the market's reaction. The price rises, sentiment improves, and traders begin to return to futures. Long positions are opened quickly, and leverage comes back.
When too many long orders pile up, the market becomes fragile again. This is the time when whales no longer defend the price. They take profits from those early positions and let the price fall. A chain of liquidations occurs, fear returns, and better liquidity appears at lower price levels.
This process can repeat many times. The goal of the whales is not to pump the price, but to build a position with a good average price, without having to chase high prices.
That's why you often see whale activity appearing strongly during price declines. This is not bottom fishing, but strategic accumulation.
Understanding this helps me stop chasing small bounces and false strength signals. A real uptrend does not need leverage to exist. It only begins when the market no longer has to rely on psychological traps and liquidations to move.
