What are Bear and Bull Market and what does it mean?

10/13/2022

     Bear and Bull Market are two most famous concepts in the world of equity investments, especially for us in the Cryptocurrency world. Discover its Meaning and influence in the market.

What are Bear and Bull Market and what does it mean?
What are Bear and Bull Market and what does it mean?

Beforehand, what are these concepts?

     If you are passionate about the world of Investments, essentially the Stock Market and Cryptocurrencies - or in other words: variable income in general, you must have heard of Bear and Bull Market...

     In a nutshell, the bull market pushes prices up, while the bear market pushes prices down, it's very simple to understand. Bulls are long and bears are short. There are market cycles and each one dominates when the major trend is up or down.

The bull attacks its prey from the bottom up and the bear from the top down. Once you understand this, it becomes much easier to dominate the market and think about how both act at certain specific times.


Understanding the Bull Market:

     As stated above, the Bull Market is when international markets are booming! Here, when the bulls are winning the battle, investors are more bullish on asset prices. The bull attacks its victims from the bottom up, with an "ascending" horn.

     Therefore, the momentary and future expectation is believing that both stocks and Bitcoin and other cryptocurrencies will go up. They use the famous operation: Long. Bears wear: Short.

Bull Market
Bull Market

     As we can see in the graphic figure above (which has broken down), it clearly shows that the cryptocurrency market in the short term was in a slight uptrend - respecting the Ascending Triangle chart pattern.

     We are currently in a strong downtrend on the 1-day timeframe and clearly we are in a Bear Market, however the idea we want to get across to you, dear reader, is that the market is not a straight line of optimism and yes, a road full of potholes, but it gets the proper maintenance and fulfills its purpose!

     We know that most assets (like bitcoin), if we look at it in the long term, have always been in an uptrend, however, when we look at smaller timeframes, that's when everything becomes a mess! Where many Traders win and many others lose! Hence all these positive and negative candles.

     When we talk about Bull Market, it is always interesting to remember the law of "supply and demand", because when the market is optimistic saying that btc will reach 100k dollars in the next few months, it is clearly a euphoria, where many investors enter the "hunger". (emotion).


Understanding Bear Market:

     The Bear Market, on the other hand, is a more dangerous and pessimistic market, however, where the biggest and best opportunities arise. It's like the internet bubble from 1994 to 2000, US tech companies plummeted and investors became pessimistic, saying that the dot com bubble had burst and that this market would never rise again.

     While many were pessimistic, many others took the opportunity and bought shares in huge companies today for pennies. Do we need to say what happened to these people ahead of their time? They certainly reaped a lot of financial rewards - because they knew how to take advantage of the opportunity that the market provided them.

But it is a fact that no one likes to see their Money melting in the short term, after all, it is necessary to have a strong heart and most people do not have this profile.

Bear Market
Bear Market

     Just as an uptrend is made up of rising tops and bottoms, a downtrend is made up of falling tops and bottoms. As we can see in the figure above, as Bitcoin falls, the asset has rebounds but is unable to form higher tops than the previous one.

     Considering that Cryptocurrency does not have the strength to keep going up, this is a chart pattern that usually breaks down, but there are exceptions. Much depends on the economy and market news.

     What characterizes Bear Market very well, without a doubt, is the pessimism and discouragement about the economy and international policies. At this time in the market, it is very painful for most investors, especially for those newcomers who came on the promise of "get rich quick".


So, how to protect yourself from market cycles?

     A very interesting fact that few investors know (essentially beginners), is that international markets are cyclical! Nothing rises and nothing falls forever. Overall, if we look at longer timeframes, both the SPY stock market and the cryptocurrency market are in an uptrend and eventually go through corrections - giving bears the opportunity to go short.

     Knowing this, the most important thing that every investor should keep in mind is: to do a sharp risk management and avoid buying "all at once". There will always be drops in the market, especially if the market value of the asset you have chosen to invest in is low: the lower, the greater the volatility. This is why Bitcoin and so many other Altcoins are so volatile. These are embryonic markets! The most valuable market in the world today is Gold, with trillions of dollars, and it is usually extremely stable.

     So, it's important to accumulate cash to know how to take advantage of the opportunities that the market offers, but that's in his time and not yours.

     The Bear Market is where the best opportunities to invest arise, however, it is very important to invest as much, psychologically, as you are prepared! Every human being is indifferent and has their investor profile, so first of all, find out if you are more conservative or bold!

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Lucas Lippe

Passionate about the digital world, from classic marketing to the fabulous world of cryptocurrencies. The idea of freedom is fascinating and bitcoin gives us that in many ways. Explaining ideas of a decentralized web on the Bitcoin Lovers website.



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