When long positions are opened too much.
MM needs to rebalance the market
Especially on large exchanges like Binance or Coinbase
Imbalance in the long/short ratio.
If longs are profiting, who will cover the shortfall due to leverage?
Well then, when it comes to risk management, the exchange will liquidate reserves to dump.
After clearing out long orders and cleaning up liquidity, the exchange will leisurely gather stock back into reserves.
A classic strategy but always effective; if combined with relevant information flows to choose timing, it becomes too easy.
Manipulation is still very prevalent.