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Cryptocurrency Bear vs Bull Market – What’s the difference?

The bull market and bear market: what is their meaning? And what are the differences between these two market terms? 

Every day in the investment universe, we hear these terms repeated regarding market conditions. Yet, as much as they are used, understanding their meaning and differences is not as easy as it sounds.

Trends and directions in the market have repercussions on one’s portfolios. So, understanding what “bull” and “bear” markets mean, together with their differences, is crucial. So, what are the bull and bear markets? And what is the difference between them? Keep reading our review to learn a fundamental lesson in analyzing the crypto market’s future.

The origin of the terms

Before understanding the difference between a bull market and a bear market, it will be necessary to start from the origin of these terms. Both names come, at least according to the dominant theory, from the way these two animals attack.

The bull turns upwards, for which a “bull market” is defined as a phase in which prices increase. Conversely, the bear’s paw is directed downwards, which explains why “bear market” indicates a reduction in market quotes.

In the Elizabethan era, the bull and the bear used to fight in arenas to delight the population. This contrast in people’s minds most likely has inspired today’s metaphor of the financial market. The bull market-bear market difference, therefore, begins to be more apparent.

What is a crypto bull market?

Generally, we can say that the bull and bear market are conditions determined by the price trend of financial securities. This is also true for the cryptocurrency industry. Therefore, despite a general index of cryptocurrencies, we note how different coins move similarly during the year.

In reality, there are specific characteristics, and not certain or absolute rules, which can help us to highlight the difference between the two market conditions:

  • Supply and Demand: We can observe strong and weak collection in a bull market. In other words, many want to buy, but few are willing to sell. This naturally leads to an increase in the prices of cryptocurrencies.
  • Investor Psychology: In a bull market, everyone is interested in actively participating in the hopes of making a profit. Investor confidence is relatively high, with a consequence on the price of the coins.
  • News in the crypto universe: during a bull market phase, we generally notice positive news in the entire crypto industry. Blockchain innovations, new payment systems, and other optimistic information can trigger a bullish phase in the industry.

What is a crypto bear market?

Now that we have seen the characteristics of the bull market, we need to understand which are those of the bear market:

  • Supply and demand: The opposite situation occurs in the bullish case in a bear market, with less demand and more supply. In other words, more people are willing to sell than buy. For this reason, the price of cryptocurrencies falls (and, sometimes, in a significant manner).
  • Investor psychology: if optimism prevails during a bull market phase, the exact opposite happens in the bear market. In this second case, market sentiment is negative, and investors start to flee a volatile market like the crypto one. It is a vicious circle: the drop in the price of cryptos drives more and more investors away, which in turn causes prices to drop even further.
  • News in the crypto universe: some information can push down the price of cryptocurrencies. Consider, for example, large-scale attacks by hackers on crypto exchanges or regulatory issues in some countries.

Investing in a bull or bear market

In a bull market phase, the best thing for an investor would be to take advantage of rising crypto prices. Ideally, therefore, it would be necessary to buy at the beginning of the trend and sell at its end. There are many analysis tools (such for example, technical analysis).

In a bear market phase, the chances of loss are much higher than in the bull market. This is because a famous saying in the market says, “you don’t catch a falling knife”. This means, in other words, that, during a bearish phase, it is generally better to stay away from the market, entering when prices rise again.

During a bullish market phase, another choice for investors may also be to invest in so-called stablecoins. A stablecoin aims to provide steady crypto over time, with a good defensive technique for an investor’s savings.

Crypto market 2022 – What we need to keep in mind

No perfectly effective method allows you to predict trends and market trends. For this reason, investors should consider the difference between market phases and study multiple elements before investing in both.

In a bear market phase, one must proceed with caution even a bull market. Remind yourself of the reason why you are investing in specific crypto, and make sure that, every day, you are in control of your portfolio.

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If you want to understand how the crypto market will move in the future, you need to consider several aspects. First, do not rely exclusively on crypto pundits’ words by searching “crypto price prediction 2022” online. We always encourage you to research the market to gain fundamental financial independence.

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