Bear & Bull Markets
The term bear and bull markets originally were used in relation to the stock market, but the same principals of these trends can be applied to the cryptocurrency market. An easy way to remember the difference between the two is by the animals they refer to. A bull will move its horns upwards to attack while a bear will swipe down with its paws. If the market shows neither pattern, it is a sideways market, and it is best to delay any transactions until a direction begins to show. However, it can be difficult to predict when trends will shift because both trends are based on the emotions and speculative opinions of traders and experts.
A bear or bearish market is one that is showing lower highs and lower lows. For example, let’s say the price of cryptocurrencies fall because of strict regulations from a large government body.The market sees this, their trust begins to waver, and some begin to sell. This continues as the markets dip more and traders anticipate continued loses.
There is a difference between a bear market and just a correction. A correction is often short-lived, lasting fewer than two months. Corrections are a positive situation, allowing investors to buy into the market at a discount price. How ever, bear markets are the opposite. There can be no guarantee when the losses will stop and where the bottom might end up.
A bull or bullish market is when the market is showing higher highs and higher lows. Bull markets are created by high optimism, confidence and increased trust that values will hold or increase. A bull market is a good indication of a strong and growing economy. In the case of cryptocurrencies, improvements in technology, increased adoption rates and positive changes in regulations can be triggers.