I think the concept is similar to how BTC (and other crypto) have major price fluctuations that get reported and acted on via liquidity from a vanishingly small proportion of the actual total BTC. There's reasons, differences, nuance, etc, but I think that's where the thought starts.

If most capital is in rarely-traded funds (I think 90-95% are passive?) then by definition those last 10%-5% active investors are going to set the market, at least in the general day to day.