Great question 👍
A bear trap is the opposite of a bull trap — it happens when the market looks like it’s breaking down into a bearish trend, but instead quickly reverses upward, trapping short sellers.
🔻 1. False Breakdown of Key Support
• Bitcoin (or ETH, or majors) dips under a critical support (e.g., BTC drops below $60k).
• Traders panic-sell or open shorts expecting further decline.
• Price then quickly reclaims support → strong bounce.
🔻 2. Whale Shakeout
• Whales deliberately push price below support to trigger stop-losses & liquidations.
• Retail investors sell in fear.
• Whales accumulate cheap coins before sending the market higher.
🔻 3. Short Squeeze
• When too many traders short, funding rates go negative.
• A sudden bounce forces shorts to cover, fueling a rapid upward spike (short squeeze).
🔻 4. Macro / News Catalyst
• Bad news (regulation FUD, exchange hack, ETF delay) creates panic selling.
• Market shrugs it off and rallies after weak hands exit.
🔻 5. Altcoin Behavior
• During a bear trap, alts often bleed harder than BTC.
• Once BTC reverses, alts rebound violently, making the trap feel even worse for those who sold at the bottom.
⚠️ Signs a bear trap is expanding now:
• BTC wicks below support but closes candles back above it.
• Oversold RSI / extreme fear sentiment.
• Sudden recovery on high volume after a breakdown.
• Funding rates deeply negative, showing overcrowded shorts.
