Crypto Market Down By 13%; Expert Call It Biggest Bear Trap

Crypto Market plummeted 13%; Over $800 Million liquidated

The broader crypto market has been bearish with more than $800 million worth of long positions liquidated in the last 24 hours. Bitcoin dropped by 15.7% to $50,850, and Ethereum fell by 22.8% to $2,249 price level. The total market capitalization of crypto has came down to $1.94 trillion a drop of -13% lowest since mid February. This decline is mainly due to the macroeconomic factors such as; The US Federal Reserve has been very reluctant in reducing the interest rates and the Bank of Japan has been very aggressive in its approach. The fear and greed index has dropped to 26 which means that the market is currently in a state of fear. 

Expert Predicting A Biggest Bear Trap 

The crypto market has declined by 13 percent in the last 24 hours. Most investors are fearing a long bear market, but analysts are expecting this might be a bear trap. Bear trap is a situation where a sharp dip in the price is planned to attract short-sellers and then the price increases sharply making the short-sellers trapped.

Let's look at the chart to understand this phenomenon.

Accumulation Zone: The market is in a consolidation phase, ranging between $15,500 and $20,000. This is the period where investors are accumulating the asset at relatively lower prices.


Source: Tradingview

Trend Emergence: The market starts showing signs of a bullish trend, breaking out of the consolidation phase and reaching the $20,000-$30,000 range.

Shake Out: A sharp correction happens after reaching $31,500. This rapid decline is designed to shake out weaker hands, those who bought at the top and are now selling at a loss.

Momentum Building: The market shows increasing momentum and moves up from $25,000 towards the all-time high (ATH).

First Sentiment Extreme: The market reaches the ATH of $73,737.94. This is where the sentiment reaches an extreme level of euphoria and optimism.

Bear Trap: The current market drop is likely a bear trap. The price decline is sharp, but it could be designed to trap short-sellers.

Although it is too soon to tell for sure, based on the chart pattern, this could be a bear trap. The investors should not be very much afraid but at the same time they should be very much careful. If the market recovers quickly, the short-sellers will be caught and the market may turn up again.

Conclusion

Despite the fact that the crypto market has been on a decline, this might just be another bear trap to attract short sellers. Thus, investors should not be too afraid but at the same time they should be careful because a fast market turn around will lock short-sellers and the upward trajectory will continue.

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