How to Dodge Crypto’s Fakeouts (Before They Dodge You)

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Hey Degens,

Crypto runs 24/7, leverage is everywhere, and books get thin when you least expect it.

That combo breeds fake breakouts or fakeouts.

Today’s edition is a straight-to-the-point guide on spotting bull and bear traps before they catch you.

Nothing crazy, just rules, and a checklist you can actually use.

TL;DR

• Wait for proof: higher-timeframe close + clean retest, then size up.

• Read the room: extreme funding + rising OI into a key level = trap risk the other way.

• Don’t chase off-hours breaks: thin books, spoof orders, listings/unlocks can fake moves.

• Respect liquidations: cascades = forced flow; snapbacks often follow once the leverage clears.

• Run a pre-trade checklist; if the setup fails it, skip it. There’s always another trade.

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🧃 THE RUNDOWN

Confirmation over hope
Breaks without a four-hour/daily close and a retest that holds are just pokes. Wait for both.

Leverage fingerprints
Spiking positive funding and climbing OI at resistance? That breakout can be bait. Deeply negative funding + OI flush at support? Watch for bear-trap squeezes.

Thin-book theater
Weekends, off-hours, listings, unlocks — great times for manufactured wicks. Let the retest decide.

Liquidation context
Cascades often mark exhaustion. After the flush, snaps back through the level are common.

Main Event — Spotting the Traps

Bull traps (fake ups)

What it looks like: 

Price peeks above resistance on meh volume, no follow-through, then closes back inside the range.

Funding flips hot and OI balloons into the level — late longs pile in and get rinsed.

Confirm it’s real:

1. Four-hour/daily close above.

2. Retest the level and hold.

3. Volume expands on the break; funding cools on the retest; OI rebuilds (not unwinds).

If any piece is missing, assume elevated bull-trap risk and keep size small.

Bear traps (fake downs)

What it looks like: 

Quick stab below support (often just a wick), then an aggressive reclaim. Funding turns deeply negative into the dip and OI flushes — crowded shorts.

Confirm it’s real:

1. Close back above the level on a higher timeframe.

2. Next pullback makes a higher low above the reclaim.

3. Volume and OI stabilize/build instead of vanishing.

If the reclaim fails on retest, step aside.

Deeper Cuts — The Tells That Matter

Funding (perps)

• Strongly positive = crowded longs; mean-reversion risk down.

• Deeply negative = crowded shorts; squeeze risk up.

Open Interest (OI)

• Rising into a key level = more fuel for a squeeze.

• Sharp OI flush during the move = forced de-risking; watch for snapback if price reclaims.

Liquidations

• Clusters get tagged, forced orders fire, then markets often snap once the forced flow clears.

Order book & timing

• Off-hours = wider spreads, less depth, easier to push. Spoofs can fake support/resistance.

• Listings and unlocks can temporarily overwhelm depth, creating head-fakes that fade on retest.

Mini Hot Takes

• “Breakout” without volume is just marketing.

• If funding is screaming and OI’s swelling, price is wearing gasoline. Don’t hold the match.

• Weekends are where good trades go to get chopped.

• Your first defense isn’t an indicator, it’s waiting for the retest.

Ugly day, clean levels. If banks settle down and BTC reclaims 110–112K, expect a relief rip. If not, $101–100K is where the market will try to write a higher-low story.

This market rewards patience more than hero entries. Use confirmation, respect leverage, and let bad breaks fail without you.

See you on Friday

— The DegenDen Team

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