Flipping through the news on the Internet, you can come up with “bull” or “bear” market terms. These terms are directly related to the stock and cryptocurrency markets. This article will try to understand how a bear and bull market works in the cryptocurrency environment.
What do bears have to do on the market?
The bear market phenomenon gets its name from the way a bear attacks its prey – it paws down. That’s why markets with falling stock prices are called bear markets. In financial terms, a bear market is when there is a prolonged market price decline. It usually describes a condition in which asset prices fall by 20%. At this point, investors begin to lose interest in the market and sometimes sell their assets and this causes prices to collapse.
The reasons that influence the emergence of a bear market:
- Decreased trading volume;
- Public health crises (COVID-19 pandemic);
- Geopolitical crises (war in Ukraine);
- Economic slowdown/bad economic data.
Bear markets are treacherous because they are notorious for their rockets, which wipe out the generous profits of the bears, but reward the bulls who buy cryptocurrencies on the decline well.
And what do the bulls do?
Like the bear market, the bull market is named after the way bull attacks by raising its horns in the air. A bull market also called a bull run, is an extended period of rising prices (in this case, in the cryptocurrency market). A bull market is conventionally created by investors themselves (“bulls”) who buy cryptocurrencies. Such a market exists as long as demand exceeds supply.
The reasons that influence the emergence of a bull market:
- Investments by large companies in the cryptocurrency;
- Increased interest from famous personalities (the same Elon Musk);
- Events that put the traditional financial systеm at risk.
The bull market marks the beginning of big things in the cryptocurrency market. Especially since there is no way to avoid it. The question is not if it will happen, but when it will happen. If you know how markets work, you know that they move cyclically, and understanding this basic premise of how markets work will put your mind at ease during the coldest (cryptocurrency) winter months.
So what’s the difference?
A bull market is a market with an uptrend. In fact, it is in on the rise. Whereas a bear market is a market that is in a downtrend and exists in a down economy. A bear market is the opposite of a bull market because, in a bear market, asset prices continue to decline for some time:
- A bull market is a significant growth over an extended period of time;
- A bear market is a significant decline over a long period of time.
There is quite a bit of talk around Bitcoin, Ether, and other crypto-assets. But the question is, what market are we in? Who dominates the cryptocurrency market today? Considering how Bitcoin and other major cryptocurrencies have been losing value over the past few months, it is safe to say that we are indeed in a cryptocurrency bear market. Don’t get upset, because a bear market is always followed by a bull market, as they say “from downs to highs”.
