In the game of the financial market, behind seemingly fair trading rules lies a logic that subverts cognition. When we combine the 'Latrine Phenomenon' in reality with the capital market, we discover a shocking truth — there exists a fatal loophole in the market pricing mechanism that can alter wealth distribution. This loophole is not only a tool for institutions to manipulate prices but also a key breakthrough for retail investors to counterattack.

1. Latrine Theory: Revealing the Underlying Logic of Market Games

Imagine a public restroom with only 10 latrines; the behavior of two groups of people determines the ultimate allocation of resources: one group acts quickly, using the latrine and leaving immediately; the other group occupies the position for a long time. Over time, even if the latter group is very small, all the latrines will eventually be completely occupied by them. This is the famous 'Latrine Theory.'


Mapping this model to the financial market, short-term speculators are like the former, frequently trading to obtain price differences; while long-term investors are like the latter, firmly locking in chips and waiting for high-price sales. When the market is in a consolidation range, long-term holders gradually absorb circulating chips, leading to a continuous reduction in potential selling pressure, creating a 'frozen' effect on chips. This phenomenon is the core entry point for understanding market price fluctuations.

2. The Fatal BUG of the Pricing Mechanism: The Truth of 0 Cost Price Manipulation

The pricing mechanism in the financial market has a disruptive loophole: the current price is only determined by the latest transaction price, completely decoupled from trading volume. This means that theoretically, just one extreme trade can instantly change the market valuation of an asset.


Taking a certain altcoin as an example, suppose its current price is 10 yuan, with a total circulation of 1 million and a total market value of 10 million yuan. If the market maker holds all circulating chips, they only need to place a sell order at the 1000 yuan level and then complete a fake buy-sell transaction at 1000 yuan to make the coin price soar 100 times in an instant, inflating the market value to 1 billion yuan. This seemingly magical operation actually costs zero!
This extreme situation reveals a cruel reality: when most circulating chips are controlled by a few people, the cost of raising prices is nearly zero. However, it is important to note that this paper profit is merely a numerical game; the market maker must successfully sell the chips to achieve real profits.

3. The Path of Retail Investors' Counterattack: Building a Profit System Using Loopholes

For retail investors with limited capital, understanding and utilizing this mechanism requires grasping two key nodes:


  1. Finding the 'Selling Vacuum Zone': When the price of a cryptocurrency remains in a certain range for a long time and a large number of chips have been exchanged, a 'selling vacuum zone' will form above the current price. At this time, a small amount of capital can leverage the price increase. For example, if a coin fluctuates around 10 yuan, due to the concentration of holders' costs at this level, there are very few sell orders above 10 yuan, creating a natural support level.

  2. Grasping the Trend Transition Nodes: Breakthroughs of support and resistance levels are key signals for judging trends. When the price falls below the support level, it means that market consensus has fractured, and the trend shifts from bullish to bearish; conversely, breaking above the resistance level indicates that bullish forces dominate. Retail investors should set stop-loss points accordingly and dynamically adjust their positions: the farther from the stop-loss point, the lighter the position; when close to the stop-loss point, they can increase their position, and if it breaks below, they should decisively exit.


The core of this strategy lies in 'cutting losses and letting profits run'. Even if the trading win rate is not high, by strictly controlling losses, each loss is limited while the profit potential may be infinitely enlarged.

4. Market Cycle: The Underlying Logic of Bull-Bear Transitions

The essence of a bull market is the continuous upward movement of the 'selling vacuum zone'. As long-term investors continue to lock in chips, the market requires less and less capital to push prices up, creating a self-reinforcing upward trend. However, when market sentiment reaches its peak and the market maker begins to sell chips, a bear market follows.


Understanding this logic allows retail investors to maintain clarity amidst market fluctuations. By identifying the true and false breakthroughs of support and resistance levels and strictly executing stop-loss strategies, one can find their own survival path even in a market filled with uncertainty.
The rules of the capital market seem complex, but they actually follow a simple yet brutal logic. Mastering the 'Latrine Theory' and the loopholes in pricing mechanisms is not to manipulate the market, but to give retail investors a better chance of winning and reduce blind spots. After all, in the financial market, cognition is the greatest wealth.#比特币战略储备