The bear market is a negative trend in the prices of a market.
Which is the exact opposite of what a bull market represents.
This Market term is also used in the traditional markets, such as real estate, stocks, commodities markets, and bonds.
From a general perspective, a bear market refers to a strong market downtrend that shows a significant fall in prices within a relatively short period.
It is common to see stronger and well-prolonged crypto bear markets.
This downturn occurs as a result of investors’ fear related to a loss of confidence in the general performance of the market prices and indexes.
In response to this negativity and market sentiment by these investors, they start selling their holdings, which leads to a further impact on the falling of prices and often leading to yielding periods.
According to Nasdaq.com, a bear market is on:
“If market price exhibits a declining trend, For a very long period, usually falling by 20% or more.”
Traders and analysts often use numerous tools as well as other systems to help them recognize other less obvious, bearish signals and trends.
If you are a regular follower of Bitcoin and cryptocurrency prices and trends, these words are unavoidable, which is the bull market and bear market.
You may want to know what these words mean?
Why the Bear and bull is used to describe positive and negative market trends?
Let’s explain further.
Identifying the Bull and Bear Market
The bull market and bear market are used to refer to the price trends.
The bear market is known for its negative attitude towards the market, which results in price decline.
They are commonly used in the cryptocurrency market.
They can be perceived under various market circumstances.
Think for example, just like a shift in supply and demand, or a change in the economy without forgetting the psychology in the market.
Yet, more and more investors are entering the market daily.
What does the Bull market represent?
A bull market shows when the price of a financial asset has been in an uptrend/rise for a longer period.
This term originates from the way a bull attacks its prey.
A bull uses its horns to drag up its prey, in this light, investors use their capital to drag up the price of stocks or cryptocurrency.
During a bull market run, investors are very optimistic.
This form of optimism is also referred to as being bullish.
When people are claiming to be bullish, they are saying they are confident that the prices will increase in the long term.
On Wall Street, you will find a statue of a bull.
The bull is used to represent confidence in the (stock) market, and the hope that the prices will increase.
The year 2017 has the most recent Bitcoin bull market occurrence.
Following the most recent bull market remembered by many;
In 2017, the prices of bitcoin and cryptocurrency increased exponentially.
This was what got everyone talking about digital currencies.
Bitcoin sparked interest in the minds of a large number of people; from bankers to food vendors to Warren Buffett and Bill Gates.
The fear of missing out was so enormous among investors.
Cryptocurrency exchanges became busier than they have ever been.
Many people whose interests were aroused in cryptocurrencies had boundless optimism in 2017.
There were new ICO’s launching almost every day and everyone wanted to get rich quickly by investing in new cryptocurrencies and tokens.
#WhenLambo even became a common hashtag on Twitter in 2017.
Although, not entirely unjustifiably, the bitcoin price increased from one thousand euros to over sixteen thousand euros in just one year.
What does the Bear Market represent?
In a bear market, the price of a financial asset is on a continuous decrease.
According to financial market platforms and websites, a decrease of 20% or more is considered to be in bear territory.
Just as the bull attacks its prey by using its horn to lift them, on the other hand, when a bear attacks its opponent, it strikes down with its claws.
Here is also another story about the origin of the term bear market.
Based on this, we have to go back to the 18th century.
Retailers of bearskins usually sell their skins before they buy new ones from poachers with the hope that this would cause the cost price of the skins to decrease.
Those who participated were called ‘bearskin jobbers’.
This was later shortened to ‘bear’, and that’s where the comparison with the bear originated from.
During a bear market, investors are generally negative about the future.
People who claim to be bearish, indicating that they are mostly confident that the prices will decrease over some time.
When people believe the market will be bullish, they are confident the prices will increase over time.
As seen In Frankfurt, there’s a statue of a bull and a bear at the stock exchange building which symbolizes the proverbial ‘fight’ between bullish investors and bearish investors.
The most recent Bitcoin bear market happened in 2018 Bitcoin and cryptocurrency were in a bear market.
Prices kept falling, and investors had less confidence in bitcoin and cryptocurrency prices.
In 2017, the same news media still praised the price of bitcoin and cryptocurrency.
In 2018 you can mainly read the opinions of investors who had lost confidence in the price.
The Bull and Bear Market Alternation
It is very important to know that the cryptocurrency market is an alternation between bull markets and bear markets.
Also, that there’s a short upswing is not necessarily a transition from a bull market to a bear market.
For instance, a temporary drop does not necessarily mean a bear market.
If prices continue to rise for a long period, we are still talking about a bull market.
Notably, 2017 is not the only bitcoin bull market, and there have also been several periods of bitcoin decline.
When looking at the longer term, you will see that the value of bitcoin has generally only increased.
As much as we can’t predict the future of Bitcoin and Cryptocurrencies.
We are all equally excited about what the future of bitcoin and what cryptocurrency will look like.
Newbies/Beginner Investors should note this:
If you are a beginner or a newbie you decide to invest in the cryptocurrency market, you need to explore trends, research key indicators and seek advice from professionals
This will help your decision-making process.
Have a thorough preparation of the cryptocurrency marketplace is the best way to tackle bear market volatility.
Even when others start panicking and making hasty decisions, you will have a reasonable business approach.
You will be able to analyze the market situation from a technical point of view because you took the time to carry out proper research.
You could also refer to an advisor so you can become knowledgeable in basic education and events in the market.
Ensure you diversify your assets and investment strategies.
Although most investors perceive cryptocurrencies as a nice addition to the traditional asset portfolio which includes shares and bonds.
Many forget about the need to diversify those digital assets as well.
There are quite multiple variants of crypto investments that vary significantly in terms of risk and prospects.
For tokens, it is very reasonable to get a set of reliable tokens such as bitcoin, Tatcoin and ether, and a few altcoins with strong growth potential, working use cases, tokenized assets, traditional classes of assets, real estate.
These real estates become more accessible for retail investors while retaining their former potential for stable growth.
There are also initial token offerings (ICO), which is one of the riskiest crypto investments.
Do ensure to research as much as possible and only invest in the tokens of companies with a strong reputation and a clear business model which solves problems, gives a roadmap on how their products will be of benefit to investors.
Be prepared for market volatility.
Those who survive in a bear market require alertness to continuous price leaps.
Avoid Debts and panic.
A standby approach can prove useful most of the time.
Arguably, it is hard to sit and wait when a bearish market is surging.
If you manage to refrain as an investor from a panic-driven sell-out, you can live through the period.
Wrapping it up
Know that loss and profit are certainly common in the cryptocurrency market.
There are not so many instruments yielding actual profits nowadays.
It is important that you get adequate education on how the cryptocurrency market works before trading cryptocurrencies or making an investment.
