Market Behavior: The Structural Drivers of Bubbles and Panics

This paper introduces a structural explanation for bubbles, panics, and regime shifts in financial markets using the Relational Structuralism (RS) framework. Rather than treating price movements as reactions to external shocks or rational expectations, the paper shows that markets evolve through presentation‑driven trajectory collapse: the moment a price path becomes publicly presented, it constrains the future paths that market participants can coordinate around. This creates endogenous feedback loops that amplify small imbalances into large‑scale regime transitions.The mechanism is simple: presentation generates alignment; alignment generates pressure; pressure generates collapse into a new regime. This explains why markets can remain stable under large shocks yet destabilize under small, seemingly irrelevant signals. The RS framework unifies bubbles, panics, volatility clustering, and sudden liquidity evaporation as different expressions of the same underlying structural process.The result is a general theory of market instability that does not rely on psychological assumptions, irrationality, or exogenous triggers. Instead, it shows how the geometry of shared information shapes the evolution of market trajectories. This provides practitioners with a clean, mechanistic account of how regimes form, propagate, and break — and why markets often behave as if they are “waiting” for a presentation event to determine their next state.