Bitcoin bull trap fears grow as BTC gives back its latest bounce

Bitcoin bull trap fears picked up after BTC’s quick move toward $66,921 faded and the token slipped back near $63,400. For everyday investors, the issue is whether the latest bounce signaled real demand or another short-lived rally inside a broader downtrend.

Decrypt reported that Bitcoin fell to $62,684 in early trading, tried to recover, and later sat around $63,400, down 2.7% in its morning snapshot. Ethereum was listed at $1,875, down 4.2%, while Solana traded at $73, down 4.4%.

The move came as risk assets were under pressure across markets. Decrypt said South Korea’s KOSPI index dropped more than 8% at the open and triggered a circuit breaker, a market pause used when prices move too far too quickly. Oil fell 2%, gold declined 1%, and Nasdaq futures turned lower, according to the report.

Is the Bitcoin rally a bull trap?

A bull trap is a rally that looks like the start of a recovery, then fails and pulls in buyers before prices fall again. Decrypt’s technical analysis argued that Bitcoin’s bounce had that shape because the move failed near a key resistance area and the price then gave back the prior week’s gains.

Decrypt said Bitcoin’s brief rise to $66,921 failed at the so-called golden zone, a technical area traders often watch for resistance during a rebound. The price later dropped to $63,422, according to the same analysis.

The report pointed to Bitcoin trading below both its daily cloud indicator and its 200-day average for months. A 200-day average is a long-term trend measure that smooths out daily price moves. When price stays below it, traders often read that as a sign that sellers still control the larger trend.

Decrypt also cited Bitcoin’s exponential moving averages, or EMAs, which give more weight to recent prices than a standard average. Its analysis said the 50-day EMA remained below the 200-day EMA while Bitcoin traded below both, a setup commonly called a death cross. The term refers to a bearish technical pattern, not a guaranteed outcome.

Liquidations show traders were leaning the wrong way

Crypto liquidations reached more than $670 million over 24 hours, according to Decrypt. Liquidations happen when leveraged trades are forcibly closed because traders no longer have enough collateral to support them.

Decrypt said $533 million of those liquidations came from long positions, meaning traders who were betting on higher prices took the largest hit. That kind of washout can make a selloff sharper because forced selling adds pressure when prices fall.

Fed uncertainty adds pressure

The Federal Open Market Committee was set to meet today and tomorrow, with Decrypt reporting that Fed Chair Kevin Warsh’s decision and press conference were due July 29. Markets expected rates to stay at 3.50% to 3.75%, according to the report.

Decrypt said traders were still reacting to Warsh’s June press conference, when rate-hike odds rose to 70% and 2-year Treasury yields climbed 16 basis points. Higher rate expectations can weigh on crypto because investors tend to reduce exposure to riskier assets when cash and short-term bonds offer more attractive yields.

Prediction market activity also leaned bearish. Decrypt reported that Myriad traders were betting Bitcoin would hit $55,000 before $84,000, reflecting caution after the failed rebound.

This story draws on original reporting from Decrypt.