Definition of Dead Cat Bounce in the Crypto World

The dead cat bounce is one of the most common patterns that can appear on stock market charts, incl crypto. This principle must be seen as potentially detrimental to investors.

If you are still a beginner in the world of crypto, you need to know the meaning of dead cat bounce. So that when trading, you don't get stuck in this one chart pattern.

Definition of Dead Cat Bounce

The dead cat bounce is one that is tricky, as if it is bullish even though it is only a chart trap. If investors looking at the top level top and the intent is increasing, its important to decide whether this image is a color image or not.

Basically, a dead cat bounce (DCB) is a temporary recovery in asset prices or a long-term increase in asset prices from a long-term downward trend. 

This pattern can appear in the middle of a bear market which will follow a downward trend in prices. Many experts consider this pattern to be worse than TR, because the bulls that occur cannot last more than a day. This process occurs when there is a temporary or short recovery, when there is a long failure.

These are called false signals and cannot be used as a signal to determine whether market conditions will improve. This is because a sudden increase in price can last for a while, before falling further in the future. 

According to analysts from Investopedia, it is not uncommon for dips to end in short recovery periods or minor recoveries, during which prices temporarily rise and then fall again.

If translated into Indonesian, the word dead cat means "dead cat that poops". In technical analysis, a bounce is considered a continuous pattern, where at first a bounce may appear to be a reversal but is quickly followed by a continued decline in the price of wealth.

Unfortunately, DCB graphics are patterns that are only visible after they appear and are difficult to detect right away. 

Also read: Getting to Know Privatekey in the Crypto World

Causes of the emergence of DCB in Crypto

Causes of dead cat bounce often arise for various reasons, ranging from point to desire. This behavior reflects the general belief of investors that asset prices will recover soon. Often, investors may think that the price of cryptocurrency has decreased.

This causes investors to buy more properties. This leads to the trap, when a large number of investors buy a certain number of properties, resulting in a decrease in property prices. Another cause of DCB can also be the speculation of day traders and short term investors. 

Buyers and investors buy assets when prices fall in the hope of making small profits by taking advantage of fluctuations throughout the day.

Moreover, the reason for this pattern can also be triggered due to price changes in the crypto market, which is vulnerable to new news and speculations in the market. 

Any negative news can push the price down and positive confirmation can push the price up. Sudden interest in any crypto asset from such news can make traders buy more crypto assets.

As a result, the price rises suddenly until the customer decides to sell their position. It is at this time that some traders are trapped in a dead cat bounce.

Also read: Get to Know USDT, a Stable Asset in Crypto!

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