What Is a Cryptocurrency Bull Trap & How to Avoid it?

Every sport has its trick play. A play where they fake movement in one direction to throw the defense off, only to move in the opposite direction.

While the crypto market has its playbook of trickery, today we will share a page out of the book called the bull trap. This pattern traps traders into buying while the market is still trending lower. And if you’re caught in this trap, the consequences can be quite severe.

Whether you’re retail or experienced traders, in this guide you will uncover the ins and outs of a bull trap. You’ll learn to hedge funds by avoiding these traps, based on an asset’s past performance, and by identifying them on a price chart.

What Is a Bull Trap? 

A bull trap is when a steadily declining asset appears to reverse in a convincing rally but soon resumes its downward trend to even lower pricing.