How to spot bull and bear market traps in crypto before they catch you

💡 DMK Insight

Fake breakouts are a trader’s nightmare, and knowing how to spot them can save you big losses. Funding rates, open interest (OI), and volume are key indicators to watch. When funding rates spike, it often signals over-leveraged positions, hinting at a potential reversal. If OI increases alongside price but volume is low, it could indicate a lack of conviction behind the move, setting up a classic bull or bear trap. For example, if BTC is currently at $62,300, a sudden price surge without corresponding volume might suggest traders are getting trapped. Keep an eye on these metrics to avoid getting caught in false moves. Here’s the thing: while mainstream analysis often focuses on price action alone, the real story lies in these underlying signals. A sudden drop in volume during a breakout could be a red flag. Watch for these conditions closely, especially on daily charts, as they can provide early warnings of potential reversals or continuations.