These terms are often used to describe the behavior of the markets, whether they are appreciating or depreciating.
Since the crypto market is highly fluctuating, these terms are used to refer to longer periods of movements in both propensities. Also, changes are indicated by substantial swings (at least 20%) in either direction.
In this case, we will focus on how these behaviors apply to cryptocurrencies. We could even ask ourselves: What is a bull or bear market? What characterizes and differentiates them? How to know if the market is behaving like one of them? The key contrasts between the two and how to trade against the 2 possible directions.
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So what is a bull market?
It refers to generally favorable economic conditions, it means that a market is on the rise, it is also usually accompanied by a positive sentiment on the part of investors regarding the current behavior.
In this type of “behavior” there is a sustained increase in the value of assets, accompanied by a positive environment (strong economy and high levels of employment, for example). Which applies to both the crypto sector and the traditional system. However, in the case of cryptos, it is more common to see more energetic and consistent bullish phases.
What does a bull run in crypto usually look like?
A significant rise in value, in one or two days, is the usual scenario (of at least 40%). This is because crypto markets are relatively smaller than others, therefore they are also more fluctuating.
On the other hand, it is believed that the term has its origin by the, in which he attacks his opponents with his horns in an upward movement. Today, this “sign” often connotes optimism about the continued rise in values.
In cryptocurrencies, “the charging bull” heralds a bullish phase. Here, you will see that assets grow in value under generally favorable economic conditions, while the more optimistic ones seek to make the most of the situation.
What is bearish behavior?
It is a situation where the value of cryptos has fallen by at least 20% and maintains it. An example includes the famous crash the industry suffered in late 2017, when both users and merchants saw BTC literally plummet in a matter of days.
In this sense, this behavior is characterized by a significant “collapse” from the previous highs. As such, the values are low and keep falling continuously. However, similar behavior can affect traders’ “prospects” and perpetuate a downward pattern. The term “bear” is believed to be related to the fighting style of this animal: it starts high and then attacks with its claws down, using all its weight to push in that direction.
During this situation, generally speaking, the economy is slow with high unemployment rates. These conditions can arise from bad economic policies, geopolitical crises, “bubble popping” and even natural disasters.
On the other hand, optimism and confidence in most investors also declines during such a “race”.
Crypto traders are targeting asset acquisition during this day, especially when bottoming out. However, it can be difficult to know exactly when it’s over, making it difficult to.
Characteristics of the crypto descending markets
Typical attitudes and actions are:
- Decreasing prices over a sustained period of time;
- The supply is greater than the demand;
- Lack of investor confidence in the market;
- The cryptocurrency is not talked about (or is negatively spoken) in the main media, as well as on social networks;
- General mistrust of cryptocurrency among economists, analysts, and traditional financiers;
- Lower highs in case of good news;
- Lower lows in the event of bad news.