A bull trap in crypto (or other financial markets) is a false signal that indicates a reversal in a downward trend, leading traders to believe that the asset’s price is about to rise significantly. However, after a brief upward movement, the price resumes its downward trajectory, trapping those who bought in anticipation of a sustained rally.

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Characteristics of a Bull Trap:
1. Price Breaks Resistance: The asset’s price temporarily moves above a resistance level or shows bullish indicators, luring traders into buying.
2. Volume Spike: There’s often a surge in trading volume, reinforcing the illusion of a breakout.
3. Reversal: After the initial rally, the price sharply reverses and continues to decline, often breaking through prior support levels.
4. Trader Losses: Traders who entered long positions during the false breakout are left with losses as the price drops.