Types of crypto market: what is a bear and bull market
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Every person who wants to reach certain heights in any area must know the basic terminology and interpretation of concepts. This makes it easy to navigate through expert statements, feature articles and forecasts. The same is true for those who want to achieve in the cryptocurrency market. In order for you to feel like a confident player, we decided to analyze in detail such important terms as bear and bull markets.
In this article, we will talk about what these concepts mean, how to interpret them, where the concept of a bear and bull crypto market came from, and how they replace each other.
Definition and Features of a Bull Market
That period of time when demand in the cryptocurrency market exceeds supply, the market is constantly growing, and investors make a lot of purchases is called a bull market. Simply put, a bull market is a dynamic and progressive market in which all of its players are in a positive mood.
We can say that the bull market creates itself. When the majority of market investors are positive, the market becomes attractive for investments and investments. This is especially true for the cryptocurrency market, where public opinion plays an important role.
It is important to understand that a bull market is not always about endless growth. Even in a bull market, asset values will fluctuate and dip, but such drops will be short-term.
However, it is very important to learn to distinguish short-term bull market corrections from the moment when the market turns bearish. Nothing good lasts forever, including market growth.
A variety of situations can lead to its fall: from a change in the mood of large investors to global disasters. Therefore, each investor and trader needs to closely monitor the global situation, analyze the influence of external factors on the cryptocurrency market, and of course follow the internal news of the cryptocurrency market.
Definition and features of crypto bear market
A crypto bear market is, by definition, the opposite of a bull market. Characteristics of a bear market:
- The overall level of trust in the crypto market is low and falling.
- The price of assets is low and continues to decline.
- Supply exceeds demand.
- Investors are very pessimistic.
- Trading in the market is very difficult, it is felt by both beginners and experienced traders.
It is very difficult to predict the end of the bear market, the process of recovery and growth of the market is very slow.Do not look at the bear market solely as a negative period. If you are pragmatic enough to build long-term strategies, you can take advantage of the situation and buy coins during a crypto bear market. In the future, when the market grows, you can recoup your investment several times over. You can only profit in a bear market in the short term if you keep a close eye on the price correction and manage to catch a short period of growth.
Some differences between crypto bear or bull markets
|Crypto bear market||Crypto bull market|
|Liquidity status||Low liquidity of assets||High liquidity of assets|
|Income from dividends||Low or no dividend returns||High dividend income|
|New investments||Potential investors refuse to enter the market. There is no trust in the market.||A large number of new investors and traders who have come due to the positive market sentiment.|
How did the terms crypto bear or bull market appear
Many terms in economics and any other social science should not be taken literally. Often these are metaphors, the meaning of which humanity is gradually forgetting. So there is a theory that the bull market is called because the horns raised up symbolize the growth of assets. The crypto bear market, according to one version, is called such because the bear's claws are directed downward when struck. They symbolize the fall of the market and assets. But again, that's just theory. In fact, knowledge of the history of the meaning of the term is not necessary for successful operation in the crypto market. But understanding the concept itself is essential.
Crypto bear market in 2022: what to expect
Today, the state of the cryptocurrency market is influenced by many events: the global energy crisis, the policy of the US Federal Reserve, the ban on cryptocurrency transactions in China, the fall of TerraUSD, as well as the failure of companies such as Celsius Network, Voyager Digital and Three Arrows Capital. However, even after all this, there was hope that the cryptocurrency market would stop being bear and begin a gradual increase. But negative sentiment intensified in November of this year after the bankruptcy of one of the largest crypto exchanges, the FTX.
It can be assumed that the crypto winter will continue in the coming months, but the end for the cryptocurrency market will definitely not come. The possibilities of cryptocurrency are too wide. The modern high-tech society cannot afford to return to a world where there is no cryptocurrency market.