Trying to understand why institutions have to unload

Here’s my understanding. Please correct me or add anything. A thought experiment or a model is as follows: When market valuation is becoming higher and higher due to short term sentiment especially fomo emotion, and the price never goes down significantly, I guess there will eventually be no more buying activity. The reason is that bulls will have used up their money assuming their available money is relatively fixed, bears will have sold out their shares, or even if they sell, no one can buy anymore. hesitaters won’t enter the market due to they think the price is not worth the value. At this point, the price cannot go higher anymore since there is no buying hence no trading at all. So no room for further profit. Some people will start to get back their investment in institutions given no more headroom. Institutions will have to sell stock but no one is willing to buy at this high price, so institutions have to reduce the price significantly eventually, so that hesitators will buy or people are willing to pour more money into the market. In reality, it’s more complicated. The institutions have incentive to sell at close to the top before such saturation and clients redeem shares at scale. So that they have some cash in hand in advance. They can use it for redemption. They can also use it to buy back shares at lower price when the stock further drops due to panic selling at scale.