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Bull trap is a term used to describe the trick that many traders fall into when the price appears to be rising strongly and suddenly drops and they lose their money. This scene is repeated and many of us may be exposed to it without realizing it. Let's understand the matter simply.

How does a bull trap happen?

Fake trend (fake price)

Whales are doing an organized job to raise the price, either by buying huge quantities or spreading positive rumors and news about the currency.

Example: Remember when a currency like Dogecoin skyrocketed in price because of Elon Musk's tweets? People ran to buy, but then the price flipped and went down dramatically.

Fear of missing out (FOMO):

As soon as the price goes up, people start running after the dream and buying quickly to catch the “opportunity”, and this increases the momentum and makes everyone believe that the price is constantly going up.

Example: LUNA coin was bought by people on the basis that it would rise eternally, but suddenly it collapsed and caused huge losses.

Flash Sale (Big Drop)

When the price reaches a certain level, the whales start selling large quantities, the price suddenly collapses, and then those who bought late are disgraced.

Example: XRP in 2020 when people rushed to buy because of rumors, then whales sold and the market flipped

How to protect yourself from the trap

Do not believe any rumors or sudden rise, and try to understand the project behind the currency before investing in it.

For example, in the FTX Token crash, many people bought because of the positive news, but the fundamental analysis was clear that there were problems.

Look at the trading volume: If the price is going up but there is no significant trading volume, this could be an indication of manipulation.

Use tools like support and resistance indicators to determine if the trend is real or just a trick.

Don't let excitement or fear push you to buy or sell quickly. Think with your first mind and plan for worst-case scenarios.

The bull trap is not new and many of us have fallen into it or may fall into it. To protect yourself, you must analyze, and not let emotions control your decisions. The market is full of surprises, so if you want to win, always keep your mind awake 😊👻

$XRP

XRP
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3.105
+0.74%

$LUNA

XRP
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0.3173
+2.81%

$DOGE

XRP
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0.33123
+0.97%