Crypto investors will tell you that a bear market is bad news while a bull market is the crypto dream. Are you confused? There's no need! We'll help you navigate the cryptocurrency market terms and their significance so that next time you hear about a bull or bear market, you will know the market trends.
Bull and bear markets - what are they?
The terms bull and bear market come from stock markets, describing how the market performs at a given time, whether it's appreciating or depreciating in value. As such, a rising market is called a bull or bullish market, while a market in a downward spiral is known as a bear or bearish market.
When it comes to the crypto market, the plot thickens. As everyone knows, crypto markets tend to be volatile and fluctuate daily or even in a matter of a few hours. Because of that, these terms refer only to longer periods of upward or downward price movement or substantial swings of at least 20% in either direction.
Crypto bull market
In the crypto world, a bull market or a bull run is considered an extended period where the market confidence is high, investor confidence is strong, many investors are buying, prices are rising, and the demand for digital currencies outweighs the supply.
You can recognize the start of a bull market when cryptocurrency prices quickly trend upwards. It's generally a sign that investors are becoming optimistic about a sustained increase in prices, which leads to higher public confidence. A positive feedback loop usually characterizes bull runs. As more people start investing, the belief in cryptocurrency markets skyrockets, attracting more investments and causing prices to rise exponentially. Market sentiment is essential for any given cryptocurrency, as general confidence always influences the asset prices in the market.
Crypto bear market
On the flip side, a bear market is characterized as that sustained period where the crypto supply is greater than the demand, prices continue to fall, and confidence is low. A bear market starts with a sharp decrease in prices, followed by more and more investors selling their assets to prevent further losses. Bearish markets are difficult to trade in and can impact the economy negatively.
During bear crypto markets, pessimistic investors will try to sell as much as possible, while others might consider this a good investment strategy opportunity. Experienced crypto traders aim to purchase assets during a bear market, believing the price will rise again, leading to good profits. However, it is difficult to predict when the bottom price has been reached and when high demand will turn the bear market back into a bull market.
When it comes to bear and bull markets in the crypto sphere, any investor should be aware that these two opposing trends are cyclic. After a longer period of low prices, there will always be an extended timeframe of higher prices, and vice-versa.
Before investing, you should always be aware of the current trend, whether it's a rising or declining one. Mainstream media follows and reports constantly on these trends, so do thorough research to know when and what to trade.
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