20 September 2021
In the Cryptocurrency market, a trend is a constantly recurring pattern of price movements. This is especially true for the Cryptocurrency sector, which is particularly vulnerable to global events that might have significant effects. It even occurs during technological developments, business launch, legislative and regulatory changes, and Blockchain integration into various spheres of industries, all of which leave their imprint on the Cryptocurrency market. All these factors require thorough studying and staying updated on the Cryptocurrency market and trends.
One of the phrases that are commonly used in the investment industry to describe market situations are - "Bull" and "Bear". These core concepts are the trends that originated on the stock exchange, which eventually made their way into the Cryptocurrency market. It plays a crucial role while investing in Cryptocurrency, given the volatility factor by the market. They characterise the general performance of the market, such as whether they are gaining or declining in value.
The market's direction is a big factor that has a significant influence on your portfolio. As a result, it is critical to comprehend how each of these market trends and circumstances can affect your assets. If you ever get the terminology mixed up, remember that Bear waves its paw and comes to a halt to fight, but Bull raises its horn and charges ahead. As a result, Crypto Bears trade for a drop, while Crypto Bulls strive for an increase.
Also Read, What Is Bitcoin Fear And Greed Index?
Crypto Bull v/s Bear Market
A Bull market is one in which prices are rising, and economic circumstances feature a favourable state. Conversely, a Bear market arises when the economy is weakening, and most Cryptos are losing value. Because investor attitudes significantly impact financial markets, these terminologies also refer to how investors feel about the market and the resulting economic dynamics.
A Bull market or trend characterizes a persistent increase in prices. During these periods, investors frequently believe that the rise will continue in the long run. Thus, in a Bull market, investors are more optimistic about the future because they expect prices will continue to go up for a time period.
A Bull market involves a period when the majority of investors are purchasing, demand outnumbers supply, market confidence is high, and prices are increasing. As investor confidence strengthens, a positive feedback cycle forms, attracting further investment and driving prices upward.
A Bearish market or trend refers to a market scenario in which the price is trending downward. Here, the majority of traders intend to sell currencies in order to profit. A Bear trend is generally considered when the market has dropped 20% or more from recent highs. Many experienced traders suggest that this is an opportune moment to invest in Cryptocurrency and diversify the portfolio while also ensuring adequate risk management.
It's difficult to forecast when a Bear market will end and when the bottom price will be achieved because rebounding is typically a lengthy and unpredictable process controlled by a variety of external factors, including investor psychology, market psychology, economic growth, and global news or events. However, they also offer the possibility of profits. For instance, if you have a longer-term investing strategy, purchasing during a down market will yield profits when the cycle turns around.
Metaphorically, Bears use their paws to claw down, and Bulls use their horns to strike upward. To put it simply, a Bull market is one that is rising, whereas a Bear market is one that is falling.
Factors Affecting the Bull and Bear markets
Despite Bull and Bear markets, the world of Cryptocurrency is constantly in flux. Sometimes, even modest gains and losses frequently cancel each other out, resulting in flattened markets. Additionally, short-term movements or market corrections that cause downward swings may create more major shifts in markets. Hence, Bull and Bear markets exist over a sustained period.
- The rising adoption of Cryptocurrency payment instruments and investment assets.
- The use of Blockchain technology and applications in business areas is also a significant driver for new Bull trends.
- In addition, legislative and tax changes that have an apparent effect on the market are also critical.
Ideal practices you must follow in each market
- In a Bull market, an investor's best bet is to take advantage of rising prices by purchasing early in the trend and selling them after the market has reached its high.
- It is important to note that any losses should be modest and transitory during a Bull market.
- Meanwhile, in a Bear market, the risk of losing money is higher because prices are constantly falling and the end is seldom predictable. Even if you decide to invest in the hopes of a rebound, you are likely to lose money before the market recovers. As a result, many investors profit from short selling.
- In a Bear market, investors who follow shorter-term strategies should keep an eye out for price surges or corrections.
- Many Crypto investors also use dollar-cost averaging, which is investing a predetermined amount of money every week or month, regardless of whether the Crypto is growing or declining in value. This minimizes your risk and allows you to invest in both Bull and Bear trending markets.
- In the Cryptocurrency market, you should analyse trends, important indications and seek professional guidance. The best approach to dealing with Bear market volatility is to prepare well. Instead of panicking and making hasty judgments, you must maintain a calm demeanour and assess the market situation from a technical standpoint.
- Diversify your portfolio by varying your assets and investment methods. Although Cryptocurrency is a valuable complement to traditional asset portfolios, you should not overlook the necessity to diversify digital assets. Instead, a range of Crypto investment opportunities differs markedly in terms of risk and potential.
- It is critical to make sure that you do as much research and planning as possible and, therefore, only invest in tokens from companies with a good track record, a clear business plan and a roadmap that explains how the project will benefit investors.
- Crypto market is highly volatile, so be prepared. Surviving in a bad market necessitates constant vigilance against price swings. Debts, fear, FUD, and FOMO should be avoided.
- A sound plan, backup plan, entry and exit strategies can help with long and short-term goals. Because if you can avoid a panic-driven sell-out, you'll be able to get through it.
The Cryptocurrency market is rife with losses and gains. Therefore, it's essential to understand the market direction of Bear and Bull markets as it will have a significant impact on your investment. Acknowledging the market's direction, as well as having a well-crafted plan and diversified portfolio; will assist you in managing market ebbs and flows in achieving long-term success in your Cryptocurrency venture.
Disclaimer: The author’s views and opinions are for informational purposes only and do not constitute financial, investment, or other advice.