Bear Trap

With multiple traders combing their cryptocurrency holding can arrange a large sell for any given coin at the same time. The sole purpose is to persuade other market participants into selling their holdings over price correction, often resulting in a further downfall of the said cryptocurrency.

This is where the bear trap is ‘released’, with the particular group of traders buying back their holdings at dead cheap pricing. Once the price rebounds, the traders end up making a significant amount of profits.

While the bear trap originated in the stock market, there have been several instances of the same phenomenon with cryptocurrencies. The entire process can occur within a matter of hours, or prolonged for several days.