You might have read an article or talked to a friend who mentioned a “bull” or “bear” market. If you nodded along but didn’t have any idea what animals have to do with the crypto industry, you are in the right place!
The terms bull and bear market have been popular for decades. These terms serve to describe particular conditions in stock or crypto markets. In this article, we’ll overview those situations and see how you can use them to your advantage!
What Is a Bull Market?
A bull market is one where economic conditions are favorable for traders. That means most asset prices are increasing, and the demand is higher. The reason why that’s a “bull” market is that bulls attack others with horns positioned upwards.
Although it depends on the person you ask, most experts agree at least a 20% price increase in 24-48 hours is necessary to consider a bullish crypto market.
What Are the Characteristics of a Bull Market?
Here are the main bull market attitudes:
- The price increases over a long period of time. This doesn’t mean the crypto value doesn’t have short-term drops, but its increase is noticeable in the long run.
- Investors believe in the market more, which means they buy the crypto more.
- Some projects might even seem like they are overpriced.
- Social networks and other media are strongly discussing the latest crypto moves.
- Good news regarding crypto leads to a strong price increase.
The easiest way to use this to your advantage is to jump on board early. If you acquire crypto before a major price increase, you can profit from the value boost to come. However, it’s important to identify and leave before the price takes a negative turn.
Bull Market Charts and Examples
You can use charts and indicators to see whether we are in a bullish or bearish market. It’s possible to analyze past price movements of particular crypto to determine different periods.
According to analysts, the most obvious example of a bull market occurred in the modern US. It started in 1982 when the stagflation ended and lasted for almost two decades. As for crypto markets, celebrity support, like the one Elon Musk provided for Dogecoin, can lead to bull markets.
What Is a Bear Market?
A bear market is the opposite of a bullish situation. The experts believe that it takes a crash of at least 20% and a long-term decrease in crypto value to pronounce a bear market. This term originates from the way a bear fights. It begins high but lowers its claws and weight.
What Are the Characteristics of a Bear Market?
This is how you might recognize a bear market:
- The trading volume is lower than what might be expected.
- There’s a noticeable lack of confidence and optimism in these markets.
- Even positive news can’t boost the asset’s value significantly.
It’s best to be patient during bearish markets. If you recognize them on time, converting to another asset before a bear market occurs is wise. Those who have patience and confidence prices will take a positive turn can invest during a bearish market. Once the situation changes and a bull market occurs again, they can profit significantly.
Bear Market Charts and Examples
As we described, a bear market refers
to the situations where the value of crypto suffers a crash and continues going down after that.
The most famous real-life example of a bear market was the Great Depression. It started in 1929 and lasted for almost a decade. In recent times, the housing crisis in 2007 and 2008 also caused bearish markets. The crypto world is more vulnerable, so even a negative comment of an important person could lead to a bearish market.