Bull and Bear markets explained
As you may already know, the crypto world is deep and complex like the ocean. It’s important to understand certain terms before you try to swim or surf (depending on how brave you are).
One of the fundamental things to note is the difference between a bull and bear market. So read along as we explain.
What is a bull market?
A bull market in crypto refers to a period where the price of a particular cryptocurrency is rising. Investors’ confidence in a given cryptocurrency is high during a bull market, and there’s an overwhelming belief that the price will continue to grow.
A bull market usually presents the best time to invest in crypto as there is a higher probability of getting decent returns on your investment. A great example is the 2021 bull market when the price of Bitcoin increased from $18,000 to $60,000 in just three weeks.
What is a bear market?
A bear market is when the price of a cryptocurrency falls for an extended period. Investors’ confidence is low during bearish markets, and the supply of crypto is higher than demand.
Unlike a bull market, investors rapidly sell their cryptocurrencies in a bear market leading to a further drop in the price. Therefore, it is difficult for newbie investors to trade in a bear market as they could easily lose money. The crypto market has experienced several bearish markets and some notable ones include the 2018 bearish market.
Bull vs Bear
Generally speaking, Bull vs Bear is a continuous battle to see who dominates the market. Crypto investors and day traders constantly analyze different factors to determine how the market is trending.
For example, during the early stages of the Covid-19 pandemic, the price of cryptocurrencies rose. This was because investors took their money from the banks and invested in cryptocurrencies. As a result, confidence began to build, and coins like Bitcoin and Ethereum began to experience a rise in value leading to a bullish market.
It is important to note that each market condition requires different strategies for beginners. One way to stay ahead is to get the latest news and development in the crypto world from trustworthy sources like Breach.
What do during bull and bear markets
We don’t give investment advice at Breach, but we can educate and help you figure things out. That said, here are a few practices that can help you during bull and bear markets.
- Only invest with what you can afford to lose.
- Consider buying small amounts of crypto regularly over time. This practice is called dollar-cost averaging, and it helps to minimize risks associated with bull or bear markets.
- Keep yourself updated with the latest news and developments in the crypto world.