Bitcoin Price Is Showing All 3 Crucial Signs of a Classic Bull Trap

The Bitcoin price increased by more than 10% in a 24-hour span, rising from $7,020 to $7,770 on both spot and futures exchanges. But, BTC is showing all three signs that the upsurge was a bull trap.

Negative futures funding rate before the rally, altcoins failing to front-run Bitcoin, and the BTC price running into a multi-year resistance level all point toward the recent price spike being a fakeout.

Futures funding rate was negative before Bitcoin rally

On Binance Futures, the funding rate of Bitcoin dropped to as low as -0.03% prior to the abrupt increase in price.

Bitcoin funding rate chart across all futures exchanges. Source: Skew

Futures exchanges like BitMEX and Binance Futures use a system called funding to provide balance in the market for both long and short contract holders. If there are more short contracts in the market, then the funding rate turns negative and traders shorting BTC have to compensate long contract holders with a portion of their positions.

As an example, if…