Capital Players Leverage Passive Funds for Peak Profits

The exit-and-dumping model, first seen in the cryptocurrency market, has been replicated in the U.S. stock market by capital players. This strategy involves inflating private companies' valuations to hundreds of billions or trillions of dollars and then cashing out at peak prices.

Passive index funds are being used as a tool for insiders to exit cleanly, with retail investors absorbing the overpriced inventory. The article notes that this model is based on the exploitation of retail investors who are forced to buy shares at inflated prices.

The strategy has its roots in the cryptocurrency world, where early project foundations would hold massive amounts of native tokens under lockup. Retail buying power would eventually dry up, and token unlock deadlines would loom, but there would be no buyer.

Founders would then repackage these unwanted tokens as compliant equity assets, allowing traditional financial institutions to legally purchase them. Tokens that retail investors would never buy outright would suddenly become 'stocks.' Institutions would buy compliantly, and retail investors would follow via brokers.