Step 0 — The setup (before anything moves)
Project lends MM the tokens + cash. MM's capital is protected from the start — they're mostly trading borrowed inventory.
Crucially, they open leveraged longs on perps before the pump Say they commit $2M: some goes to spot accumulation, a chunk goes to 10–20x perp longs. The perp leg means they profit from the pump far beyond the spot they actually bought.
Step 1 — The pump
Buy spot through thin books: 0.0017 → 0.0051. Because books are empty, maybe only 500K–1M of real buying creates a 3x candle.
The perp longs are now deeply in profit — this is where most of the money is made, not the spot.
Step 2 — Distribution at the top
Sell the loaned spot inventory into the FOMO bids around 0.0045–0.0051. They return the token loan later — every token sold above their basis is pure USDT profit.
Step 3 — The trap
Price stagnates, volume dies. They let it drift down a little — even sell into their own bids lightly to print red candles.
Retail reads: "pump is over, time to short." Account long/short ratio drops to 0.71 — Every one of those shorts is a future forced buyer.
Step 4 — The squeeze
Re-pump with modest capital (shorts' liquidation prices cluster tightly . Each short liquidation is a market buy they didn't have to pay for. Price rips back toward the highs "for free."
Step 5 — The real exit
During the squeeze euphoria, they:
dump the remaining loaned spot into FOMO longs
close their perp longs from Step 0 at the top
optionally flip short on perps here if they intend to drive it down afterward
Funding during the squeeze is massively positive (longs paying shorts) — if they flipped short, they're being paid by the FOMO longs to hold the short that will profit when price collapses.
Step 6 — The bleed
Once inventory and longs are flat, they stop defending the price. Slow bleed to pre-pump levels. Retail longs from the squeeze hold the bag; shorts who entered at Step 3 already got rekt.