The markets are a game of liquidity. Look at liquidation heatmaps such as those on Hyblock Capital if you don't know what I mean.

Despite what people like to believe, the sentiment is driven by manipulation, through regulation or threats of regulation, institutions, inflooencers, ideologues, actual scams and the like. Once the price starts pumping, people get FOMO because the propaganda tells them that price will never come back down again, so they buy on the pumps impulsively, believing they are going to get rich from it.

Those people are now the exit liquidity for the person who bought at $16k.

I bought around $16k, some of it is for long-term holdings, while some of it I have gradually scaled out as the price has risen up in the event that it does come back down again, which I believe it will because I don't believe we are in a "bull market" yet. This way I get to play both sides of the market, but it takes a long time because the true moves can take years to play out, and people call me a retard on both sides. "It's going lower, you should wait" or "It's going to the moon, you shouldn't sell".

Then, the people who fomo'd in at $40k end up panic-selling when the price dumps significantly, and guess who buys their losses back from them? The same people who sold it to them at $40k.

As Warren Buffett put it, "The stock market is a device for transferring money from the impatient to the patient."

The crypto market is no different, the same principles apply. If people were not so easily emotional manipulated, then the game of liquidity would be much more difficult for the manipulators.