Dead Cat Bounce

A "Dead Cat Bounce" is a term used in financial markets, including cryptocurrency trading, to describe a temporary recovery in the price of an asset during a prolonged downtrend. This short-lived rebound gives the appearance that the asset's price is recovering, but the upward movement is followed by a continuation of the downward trend. The phrase originates from the idea that even a dead cat will bounce if it falls from a great height. In the context of crypto, traders may interpret a dead cat bounce as a false signal of a market reversal, leading them to buy into the asset prematurely. However, when the asset continues its downward trend, these traders may face losses. Identifying a dead cat bounce requires careful analysis of market trends and indicators to avoid mistaking a temporary recovery for a genuine reversal. A dead cat bounce is often observed in highly volatile markets, such as cryptocurrency, where sudden price movements can deceive traders.