When the market shows all the signs of a bear trend—heavy selling pressure, broken support levels, negative sentiment—many traders rush to short. That's exactly when the trap springs.

A bear trap is when prices plummet briefly, triggering panic sells and stop-loss orders, only to reverse sharply upward. It catches aggressive bears off-guard, liquidating their positions while trapping them out of subsequent gains.

What makes bear traps dangerous? They create false signals. You see lower lows, volume spikes, and panic selling—textbook bear market signals. But then institutional buyers step in, liquidity dries up on the downside, and suddenly momentum flips. Retail traders caught shorting at the bottom face brutal liquidations.

The key is recognizing the setup: Is there actual fundamental weakness or just coordinated selling? Are support levels holding at key technical zones? Is volume confirming the breakdown or fighting it? Smart traders watch for divergences between price action and other indicators—these often precede reversals.

Bear traps remind us that in crypto markets, the most obvious trade is often the most dangerous one. Patience beats aggression.