You might be wondering what bear and bull have in common with crypto. Well, you are not alone. Let’s try to figure it out together!
As we all know, the cryptocurrency market is really volatile. It means that market fluctuations are a usual case.
Investors and traders have a strong influence on market sentiments. Depending on those sentiments, the asset prices can either rise or fall.
To identify the market condition, traders use such terms as Bull Market and Bear Market.
In this article, we will try to explain the definitions and the main differences between the two of them.
Are We Talking about the Zoo?
Well, the question is pretty obvious, but no. If you go deeper into it, you’ll see a logical sense.
Why are these terms ‘Bull’ and ‘Bear’ markets called like this?
It refers to the method of attacking these animals: the bear strikes with its paw down, and the bull throws the enemy with its horns upwards. You can draw a parallel between those methods and charts.
Keep this in mind before reading the article! You’ll understand everything in the end.
What is a Bull Market?
Performance of the DJIA since 1915
As you understand now, the Bull Market is the opposite of a bearish market. This term is used to describe favorable economic conditions in the market. It means that prices are rising or expected to rise.
How Does the Bull Market Occur?
The “bull market” begins when investors start to buy crypto, thus increasing market confidence.
Another marker of such a market is the presence of a large number of optimistic forecasts for the availability of other assets.
The Crypto market is volatile, so sometimes it’s hard to identify the Bull Market. However, there are two main marks of it:
- Stable price growth;
It is said that the bull market occurs when prices for bitcoin and altcoins increase by more than 20% over time: from 2–3 months and longer.
This type of market is a great opportunity for beginners to start their crypto journey.
What is a Bear Market?
Bitcoin price crashes after the 2017 bull market
The Bear Market is about a negative trend in the prices of a market. It’s characterized by a decline in market activity and a sharp drop in prices.
How Does the Bear Market Occur?
The beginning of the “bear market” occurs when the value of the crypt falls by at least 20% compared to recent peaks.
When investors and traders are pessimistic, they predict only a further fall in prices. They stop investing, and that leads to frustration and distrust of the market.
Look through some signs of a “bear market” to be warned:
- Decline in prices over a long period of time;
- Low trading volume;
- Supply exceeds demand;
- General distrust of cryptocurrency
This type of market is risky for those new to trading crypto. So, if you are an inexperienced user, better wait for the situation to be improved.
Now You Know!
To conclude, the difference between Bull & Bear Market is obvious. The knowledge about both of these types will make your trading experience easier and safer. Always remember that the crypto market is volatile and risky!
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