How To Spot Bull And Bear Market Traps In Crypto Before They Catch You

Learn to spot fake breakouts in crypto using funding, OI and volume signals — and avoid bull and bear trap setups.

Use confirmation, not hope: Wait for a higher-timeframe close and a clean retest before sizing up.

Read leverage tells: Extreme funding plus rising open interest at a key level signals trap risk in the opposite direction.

Don’t trust thin books: Off-hours liquidity, spoof orders, listings or unlocks can manufacture fake breaks.

Respect liquidations: Cascades often mark exhaustion; snap-backs are common once forced flows clear.

Markets run 24/7, and a growing share of volume comes from high-leverage perpetual futures. That means even small order imbalances can trigger sharp, short-lived moves.

That’s why bull traps and bear traps are so common in crypto.

A bull trap happens when the price pokes above resistance and then reverses, while a bear trap occurs when the price dips below support and quickly snaps back. These fake breakouts often result from forced liquidations and mean reversion, clearing out crowded positions.

Liquidity is typically thinnest during weekends and off-hours. Market makers widen spreads to manage risk, and a single headline can move prices beyond key levels before liquidity returns.

The clues lie in leverage and positioning. When funding rates in perpetual futures turn strongly positive or negative, it signals crowding on one side of the market. When open interest builds near key levels, it often sets the stage for squeezes in either direction.

Source: CoinTelegraph