What even is the infamous Crypto Bear Trap?
When the market experiences a significant downtrend traders might be eager to look for purchases thinking prices are about to rebound. Quite often they end up buying too soon however followed by a continuation in falling prices leading to very significant losses.
Next up is how do you identify it?
REAL market reversals almost always take multiple weeks or months to be formed. If you see the price of an asset decline for a long period and see prices rebound this is almost ALWAYS a bear trap.
Here's how the crypto bear trap takes charge :
Even if you somehow started buying at the bottom by coincidence once prices start to rebound. REAL reversals take time and don't happen overnight. Bottoms take a while to be formed and require multiple retests. Remember that you're not going to miss out buying too early.
But how can you avoid it without missing out on gains?
In order to avoid these bear traps, it’s essential to carefully research any asset you’re considering investing in. Ensure you know what's going on and that you are not buying into an endless fall.
Take a rugged project for example.
Any drop isn't just a normal correction. These projects are going straight to zero without ever rebounding back to life. Same with the $LUNA spectacle.
THOUSANDS of traders tried to buy the rebound. Meanwhile an event was going on to increase the circulating supply IMMENSELY driving prices to mere pennies. Understanding this event would have saved rebound buyers. There's a difference between fundamental factors and normal corrective behavior.
Additionally, it may be helpful to use stop-loss orders.
This trick lets you automatically sell your assets if they fall below a specific price.
I would sell my assets at a 5% loss and be wrong any day OVER holding on to them and hoping they ever bounce back.
Stablecoins are very effective assets during the bear market and here is how they work -
https://www.ourcryptotalk.com/post/how-stable-are-stablecoins
WHAT TO DO AFTER FALLING FOR THE TRAP?
If you have fallen into a crypto bear trap, trying to salvage your investment is not impossible. You can sell your assets at a loss and cut your losses.
No matter what you might think or hope, bad projects will never recover.
Coins like $BTC or $ETH will probably recover (although it can take time).
The best way I've found to deal with these is to just prevent falling into them.
Although this is easier said than done I've found having an incredible amount of patience helps with these.
Don't rush purchases. The market almost always comes back for a second or third test.
Want to avoid this all together and use an OPTIMAL AND SAFE proven method?
Consider reading my thread on "securing wealth" in a bear market
Less perfect than timing the market but most optimal for 99% out there.
Nova out
If you are into crypto and looking to hold up discussions, join communities and network better with traders and crypto enthusiasts from all over the globe, you should definitely check out -
https://app.ourcryptotalk.com/