If you have ever read any price predictions or history of market changes, undoubtedly you came across the concept of trends and therefore the idea of bull and bear markets. The terms “bull market” and “bear market” came to crypto from a stock market. Nowadays they can be applied to everything that is trading. Let’s take a closer look at these terms to understand better what is going on in the markets.
What is the bull market?
When you hear something about a bull market, it means that prices are rising or are expected to go higher. Usually bull markets happen when investors and traders feel confident and optimistic. This phenomenon can be witnessed in times of stable economy growth, for example. However, it is almost impossible to predict when the bull market can happen. Usually experts talk about it looking back.
The crypto market is a little more volatile than the stock market. Therefore the term “bull market” in cryptocurrency usually refers to any upcoming trends and people’s expectations. However, there are some signs of the potential bull run.
Let’s use Bitcoin as an example. Everyone who is holding BTC is expecting the bull market. What should they look for? Bitcoin should overcome two levels: first of all, it should break the sell wall, the next step is the resistance level. If Bitcoin is attacking the resistance level, we can say that it is entering the bull market.
What is the bear market?
On the contrary, when prices are going down we are facing the bear market. It usually represents a generally pessimistic attitude. There are a lot of reasons for the bear market. It is often connected with economic slowdown or recession. As well as the bull run, the bear market can last for a very long period of time, for months or even years.
Similar to bull markets, the “bear market” describes all the downgoing trends and the general investors’ attitude. There is a chance to identify the bear market for a certain coin, Bitcoin, for example. If the BTC price is about to break the first level of support, there is a huge possibility for it to start the bear market.
When a coin is entering the bear market, the most important thing for investors is to survive this period. The first, but probably the most difficult thing to do is to take a break and give it some time. If you believe in cryptocurrency’s future and there are no objective reasons for a sudden fall, the bear market may be temporary. The next thing to do is to forget about “buying the dip”. It would hardly work when the general trend is downgoing.
Why are these market trends called so?
What do they have to do with animals? There are a lot of theories about the names, but the most widely accepted is based on animals’ behavior during the attack. Getting ready to attack the bull stands straight, puts his horns up high and behaves very aggressively. On the other hand, the bear usually swipes down.
What do crypto enthusiasts say about bull and bear markets?
As was said before all BTC holders are waiting for the bull run, but you cannot get carried away with what it may bring. So here is a piece of advice from Anthony Pompliano (The Morgan Creek Digital co-founder):
Sometimes it is not easy to make proactive decisions. Especially if it concerns a crypto market, which is changing super fast. This is why we would like to remember the next advice from Taylor Monahan (Founder & CEO of MyCrypto):
Thank you for reading this article. We hope that now you have a better understanding of what bull and bear markets are. However, we want you to pay attention to the fact that we do not give any investment advice. Decisions concerning investments are the personal responsibility of individuals.