Whale traps take place when big investors exploit the market to create the panic and rapid dump and pump in the market..
Let me tell u how it happens:
PUMP:
WHALES buy a major amount of cryptocurrency which causes the price to increase quickly. This thing invites other investors also. Other investors who missed FOMO also buys which increses the price hike.
DUMP:
ONCE the price is high, whales started to sell their holdings because they earn a lot of profit.
Sudden selling pressure causes the price to decrease.
Whale traps influenced the market volatility and play with trader emotions to create opportunities for big players to have profit. Small investors is at loss due to this trap.