It appears that Bitcoin is seeing a lengthening of cycles due to a growing market cap, which in turn leads to a lower ROI per cycle. Or, there might just be another surprise or two in store.
It is very obvious that both Bitcoin and several other Altcoins are trading their lowest in six weeks. Traders feel that Bitcoin has capitulated from 65k to 28k in the past. However, those who consider one full cycle are pointing to how the price went back from 28k to 69k. This is apparently a bull trap.
For clarity, “A bull trap is also known as a “whipsaw pattern,” and refers to a false signal where a value of a stock, cryptocurrency, or any other kind of financial asset, displays a sign of recovery or reversal after a downtrend when in reality, the asset is actually set to decline further.
For clarity, “A bull trap occurs when a trader or investor buys a security that breaks out above a resistance level—a common technical analysis-based strategy.
A bull trap for simple understanding means the price is going to fall
Practically, A bull trap is a false signal, referring to a declining trend in a stock, index, or other security that reverses after a convincing rally and breaks a prior support level. The opposite of a bull trap is a bear trap, which occurs when sellers fail to press a decline below a breakdown level.
A bull trap pattern typically occurs at a resistance level and is a bearish signal forming with an uptrend. It does not require to be an all-time high. An investor should search for a bull trap in a bullish market where the price is expected to move in an upward direction.
It becomes important for the market makers and influencers to trigger a bullish trap, if they want to make buyers buy in to an asset type or perhaps hold it.
Triggering a bearish trap does the reverse, where the seller is made to believe that the price will go down and this triggers him to sell.
In any market cycle, buyers and sellers keep making buying, selling and hold decisions. Bullish and bearish traps are triggered by narratives coupled with historical trend charts, thus influencers kick in traders in to making buying and selling decisions.
Depending upon what the investment goals are for traders or for anyone who has a skin in the game they need to Do Their Own Research and stay accountable for their decisions.
Get the latest Crypto & Blockchain News in your inbox.