Have you ever come across a crypto asset whose price came down abruptly? The fall in price is sharp and a sustainable decline was observed. In the crypto space, this is known as dead cat bounce. This action is spontaneous and is not typically anticipated to make a significant impact. This type of fall in price is often associated with market manipulation since such a method is often used to artificially inflate the prices of crypto assets before they are sold for higher amounts.
Although there is no proof that dead cat bounce can actually be associated with market manipulation, they are often seen in such a fashion. Investors must always be careful while investing in any digital asset and should always do their own research. Dead cat bounce is also used as a technical indicator by many analysts. During the formation of this pattern, it might look like a shift in trend. However it is often followed by additional movement of price in the reverse direction.
During a fall in prices, there are very short or tiny recovery patterns interrupting the downtrend. Experts often use these patterns to deduce the time in which the asset can see a rebound and how sustainable it shall be.