What Is the Concept of ‘Price Discovery’ in a Highly Concentrated Market?

Price discovery is the process by which buyers and sellers interact to determine the market price of an asset. In a highly concentrated market, where a few large holders (whales) dominate, price discovery is often inefficient and prone to manipulation.

The price may not accurately reflect the true underlying value or broad market sentiment, as the actions of a few large players can create significant, artificial volatility. This concentration undermines the fundamental efficiency of a free market.