Bitcoin Bull Trap Could Signal More Downside
On-chain analyst Willy Woo has warned that a potential Bitcoin bull trap may be forming, suggesting the market could see another short-term rally before the broader downtrend resumes. According to Woo, Bitcoin’s current price range is unlikely to represent the cycle bottom, meaning investors should remain cautious in the coming weeks.
A bull trap occurs when the market appears to break into an uptrend, attracting buyers, only to reverse direction and continue falling. Woo shared his view on X, stating that the current setup could lead to a temporary rally that may last until the end of April before the larger bearish trend continues.
His analysis focuses mainly on liquidity conditions rather than short-term price movements. Woo explained that for the market outlook to turn more positive, there needs to be a strong return of capital from long-term investors. If that happens, he said he would reconsider his bearish stance.
Bitcoin has dropped roughly 46.8% from its October all-time high of $126,000 and was trading near $67,000 at the time of writing, according to CoinMarketCap data. Despite this sharp decline, the cryptocurrency has gained about 3.7% over the past 30 days, showing signs of short-term recovery.
Woo also noted that after a rapid price drop, Bitcoin typically enters a sideways phase followed by a rally where key resistance levels are tested. However, he believes the current levels still do not represent the final bottom of the market cycle.
Whale Selling vs Retail Buying Raises Concern
Market data suggests that investor behavior may also be signaling further downside risk. Crypto analytics platform Santiment reported that large holders, commonly referred to as whales, have been selling Bitcoin while retail investors continue buying below the $70,000 level.
Historically, this type of market behavior has often appeared before additional corrections. When smaller investors buy aggressively while larger holders reduce their positions, it can indicate that the market has not yet reached its lowest point.
Despite these concerns, Woo pointed out that investor flows into Bitcoin have been steadily recovering since mid-February. This suggests that while the market remains under pressure, long-term interest in the asset is gradually improving.
Other analysts share a similar outlook. Crypto analyst Benjamin Cowen recently said that 2026 is likely to be a bear market year for Bitcoin, making new all-time highs less likely in the near term. Meanwhile, on-chain analytics firm CryptoQuant also stated that Bitcoin remains in a broader bearish cycle despite the recent rally.
Investor sentiment reflects this cautious mood as well. The Crypto Fear and Greed Index, a popular measure of market psychology, recently dropped back into “extreme fear” territory after briefly recovering earlier in the week.
