Perhaps there is nothing as volatile as the crypto market. Many individuals devote time and resources to learning how to trade these unique digital assets in fluctuating market conditions. Accordingly, describing particular crypto market conditions gave rise to terms like “Bull” and “Bear” in crypto trading.
It is noteworthy that cryptocurrency prices fluctuate every day and these terms do not explain such short-term volatility. Bull and bear in crypto describe a general market condition lasting for weeks to months or longer periods. In a nutshell, they’re referred to as seasons sometimes.
For context, understanding patterns and trends is crucial to knowing when to invest and the particular trading strategy to employ. So, in this piece, we’ll explore these 2 crypto market conditions while highlighting their key differences.
A Bull Crypto Market
During a bull season, there are generally favourable market conditions and most cryptocurrency prices rise. Usually, the price increase is sustained (bull run).
As general principles of demand and supply apply to the crypto market, this particular market trend witnesses strong demand, even if there is low liquidity. The high demand stems from boosted investors’ confidence and generally favourable market sentiment towards cryptocurrencies.
Consequently, crypto prices shoot up for a season, driven by all these factors.
Bear Market
In contrast, a bear market condition denotes when crypto prices fall. As stated earlier, this isn’t just a dip that occurs for a short while and then the value spikes back up. When the market follows a bearish trend, crypto prices continue to plummet from previous highs over a sustained period.
While the market condition worsens, investors lose confidence and there is increased sales of crypto tokens. As supply begins to outweigh demand, prices begin to drop. Market sentiment towards crypto remains unfavourable during this period and some investors sell their holdings in panic.
Bull vs Bear Crypto Market
During bull seasons, economic conditions and the traditional market situations are better, unlike bearish market conditions. Moreover, institutional crypto investments or adoption characterise or may begin a bull season in contrast to bearish market conditions.
Also, celebrities, public figures and influencers adopting crypto and promoting it on mainstream and social media can herald a bull season by boosting investors’ confidence in crypto. However, negative views by influencers about crypto in the media can cause a bear market.
Strategic events like wars, major elections, natural disasters, etc which affect traditional markets and general economic conditions also impact the crypto market significantly.
So conditions that boost confidence and market sentiment will result in a bull market while the reverse paves the way for a bear crypto market.
Survival Tips
One can buy crypto during any market condition after careful analysis and research. Buying crypto in a bear market to hold till a bull run will result in substantial profit.
As stated in our previous article, “Many authorities rule that it is generally better to buy and hold during a market slump (bearish trend). Buyers should however ensure that it’s a general trend and not isolated to the particular crypto they want to buy.”
Interestingly, an investor can recognize an incoming bull trend and buy crypto assets while their value continues to appreciate. Similarly, the user must recognize when the trend has reached the ceiling to sell and maximize profit.
It’s important for users to study historical trends as bull and bear seasons occur in cycles. With historical data, they equip themselves with better strategies for each bull or bear market season.
In Conclusion
The crypto market is highly volatile (featuring bear and bull seasons) and influenced by many factors. Understanding the peculiarities of each season endows users with higher chances of maximising profits from crypto trading.