The cryptocurrency sector is highly volatile and subject to numerous factors, trends, and demand and supply principles. When it comes to trading, there are two patterns to take into account: uptrends and downtrends, both vital elements of the cryptocurrency market cycles.
Interestingly, uptrend and downtrend conditions are often described by the terms “bull” and “bear”, commonly used in the stock market. We should note that these two terms are associated with the way both animals attack. While the bull will thrust its horns high, the bear will swipe down.
Knowing if values are appreciating or depreciating in the cryptocurrency marketplace is vital, so learn more on how to analyse the bull and bear markets in cryptocurrency trading.
When we talk about bull markets, we mean that the market is doing well, and values are expected to grow. This is typically accompanied by favourable investment moves.
Whenever the value of a coin keeps increasing for more than a couple of days, that is said to be in a bullish trend. It’s when many beginners and even experienced investors seek assistance from apps like Bitcoin Profit or Binance to connect with brokers in order to buy well-performing digital assets.
In essence, a bear market is contrary to a bull market, or when crypto values keep declining. This generally occurs after a bullish trend, when supply exceeds demand. As stated on CoinTelegraph: “a bear market is one in which the value of cryptocurrencies has fallen by at least 20% and is continuing to fall. An example includes the famous cryptocurrency crash in December 2017, when investors saw Bitcoin fall from $20,000 to $3,200 over the course of a few days.” Note that during a bear market, economies may slow down and result in unemployment.
Investing in a bear market can be riskier as assets decrease in value, and strategies such as short selling may be needed to achieve potential profits.
Aspects Influencing Bull and Bear Market Dynamics
From interest among celebs to regulatory restrictions, there are different factors affecting crypto markets. Supply and demand principles perhaps have the most significant influence on the price of a digital coin: when consumption increases, the price rises, while when supply increases, the price drops.
Trading psychology and investor confidence also affect markets. Naturally, market sentiment is negative during a bear market.
Note that it is not only unique events or unexpected social turmoil or health crises that can affect markets. Investors should have a broader picture: how markets will perform in the long term should also be considered. Given the complexities of investing, beginners unsure about their trading options should always consult a financial professional.
Due to the volatility of Bitcoin and other cryptos, bearish and bullish trends keep changing. One should learn how to read trading signals, spot reversing patterns, and keep up to date with the latest news.
Interestingly, while many buy during bearish markets to make a profit, buying during bullish markets can boost the uptrend and benefit investors. Either way, cryptocurrency trading remains risky, and one risks losing their entire capital.
That said, the cryptocurrency sector is highly lucrative and keeps attracting more and more people. People who are excited to see who will win: the bear or the bull!