Dead Cat Bounce

"Dead Cat Bounce" refers to a temporary recovery in the price of a cryptocurrency or any asset that has experienced a significant decline, followed by a continued downward trend. The term suggests that even a dead cat will bounce if it falls from a great height, but it doesn't mean the cat is alive.

Example: In cryptocurrency trading, Bitcoin experiences a sharp decline in price from $60,000 to $30,000 over a few days. After hitting the $30,000 mark, there is a sudden surge in buying activity, pushing the price back up to $40,000 within a short period. This upward movement might entice some traders to believe that the worst is over and start buying again, but it could be a dead cat bounce. Eventually, the price continues to decline, reaching even lower levels.

Case: Ethereum's price drops by 50% in a week due to negative market sentiment. After hitting a low point, there's a brief rally where the price increases by 20%. However, this rally is short-lived, and Ethereum's price resumes its downward trajectory, eventually reaching new lows. This temporary uptick followed by a continued decline is considered a dead cat bounce.