What is a Bear Trap?

The Bear Trap is a common tactic used by traders to manipulate the market. It usually involves a group of traders with large holdings of a particular cryptocurrency. Together, they will sell a large amount of the coin simultaneously to persuade other market participants that a price correction is taking place. This will cause them to sell their holdings, driving prices down further. At this point, the bear trap will be released, and the group will buy back their assets at a lower price. The coin's value then rebounds, and the trap setters have made a profit. Bear traps can occur over several days or within a matter of hours.

They are most often seen during market downtrends when there is more demand for stocks than holders willing to sell. The buyers will increase their bids, attracting more sellers and pushing the market upwards. However, stockholders only realize profits when they sell the shares. This means that higher rates of acquisition also increase pressure to sell. In response, institutional investors will dump stock to push prices down. Some investors buy stocks when prices fall to a certain level, hoping that prices will go back up and they can make a profit.