Why the Bitcoin Rally Seems More Like a Bull Trap

Crypto markets opened the day red—and then got redder.

South Korea’s KOSPI index fell more than 8% at the open and triggered a circuit breaker, sending a risk-off shockwave through global markets before New York traders had finished their coffee. Bitcoin’s response was fast: a drop to $62,684 in early trading, a brief attempt at recovery, and then—nothing.

Decrypt’s morning snapshot put BTC at $63,400, down 2.7%, with Ethereum at $1,875 (-4.2%) and Solana at $73 (-4.4%). Over $670 million in crypto liquidations tore through the market in 24 hours, $533 million from longs—which is what happens when too many traders bet on a rally that wasn’t real.

Oil fell 2%. Gold dipped 1%. Even the Nasdaq futures turned red, weighed down by memory stock weakness. The only thing that didn’t move was the Fed—and that’s exactly the problem.

The Federal Open Market Committee meets today and tomorrow, with Fed Chair Kevin Warsh’s decision and press conference due July 29. Markets expect a rate hold at 3.50–3.75%, but the memory of Warsh’s June presser—when he sent rate hike odds to 70% and 2-year Treasury yields surged 16 basis points—has traders deleveraging rather than holding through. Stocks are split: Dow futures up 0.7%, Nasdaq down 0.9% on memory stock weakness. Oil fell 2%. Gold slid 1%. Crypto is taking it worse than most.

Bitcoin price: The bounce was a trap

Let’s revisit the story from earlier in the session. Bitcoin’s brief push toward $66,921 generated optimism. The 200-day exponential moving average, or EMA, had held, bulls said. (EMAs are basically the average price during a specific period of time.) The market was finding its footing. Except the charts—read properly—tell a different story.

Between Monday and Tuesday, BTC has lost all the gains from the previous week, cancelling the bullish trend and going back to bear territory, almost as strong as the pre-bounce days. Notice how the current resistance is parallel to the previous one that marked the dip from May to July.

On the bigger picture—the daily chart stretching back to September 2025—the structure is even harder to be optimistic about.

Price has been trading well below both the cloud and the average of the last 200 days for months. The occasional green week shows up, gets sold, and the slide continues. This week looks like it’s following the same pattern.

The three bearish resistances (the blue line from November 2025 to April, the white one from May until July, and the one currently forming) are parallel:

What the indicators say

The exponential moving average structure is unambiguously bearish. EMAs give traders a view of where price is relative to average levels over time—the further price sits below them, the weaker the underlying trend. The current formation—50 EMA below the 200 EMA, with price below both—is called a death cross, and it has been active for months.

The RSI—Relative Strength Index, which measures buying and selling pressure—is at 46.5. Below 50 is a bearish lean. It’s not oversold enough to attract forced bargain hunters (that happens below 30), and it’s not high enough to suggest any real buying momentum. Neutral to slightly bearish is the fair read.

The Squeeze Momentum Indicator has been active for nine bars, which is significant. Something is loading. The problem is that squeezes resolve in the direction of the prior trend far more often than they reverse it, and the prior trend—every indicator on this chart agrees—is down. The momentum reading inside the squeeze is showing 0.25v: barely any bullish lift. That’s not the signature of a squeeze that’s about to fire upward.

What Myriad traders are betting

On Myriad—the prediction market built by Decrypt‘s parent company Dastan—the market is straightforward: does Bitcoin hit $84,000 or $55,000 first? Traders are placing 65.7% odds on $55,000. There’s only a 34.3% chance of a pump.

Back in March, before Warsh’s first press conference turned hawkish, that split was nearly the opposite. The crowd has been repricing Bitcoin’s downside for months, and the technical picture today isn’t giving them reason to change course.

The bull case does exist, but it’s thin. A dramatically dovish Fed surprise tomorrow—Warsh signaling patience rather than hikes—could be the external shock that resolves the squeeze upward and forces a short squeeze through the $65,302 Fibonacci zone. Any revival of the Senate’s Clarity Act would add regulatory tailwind. But both outcomes require events outside the chart to rescue a setup that, on its own, leans bearish.

Right now, the bounce to $66,921 looks exactly like what bull traps are supposed to look like: a run into resistance, a failed breakout, a return to prior lows, and a squeeze loading the next leg. The next leg, based on everything the indicators are saying, does not appear to be up.