A bull trap is a situation in the cryptocurrency market where the price of a digital coin experiences a drastic increase in the short term which creates an expectation that the price will continue to rise (bullish). However, this increase was then followed by a rapid and sharp decline in prices.

 Bull traps often trigger wrong market sentiment because they give the impression that there is an upward trend, so many traders and investors are trapped. The initial price increase in a bull trap is usually triggered by momentary positive news/events that cause the market to overreact.

 Beginner traders often become “victims” of the bull trap by buying digital coins at high prices in the hope of an uptrend. But actually there was a bearish trend, so they experienced big losses.

Example of “bull trap” in use in a sentence

“The bull trap that occurred on Dogecoin some time ago trapped many retail investors into buying fake dips.” 

“After in-depth analysis, it turns out that Bitcoin’s increase yesterday was just a bull trap, not a true reversal signal.”

“Traders must be careful and alert to bull traps so as not to waste capital when prices suddenly drop drastically.”

Source:

 https://www.investopedia.com/terms/b/bulltrap.asp