Crypto trading 101: Bull and bear market definition explained
Traders worldwide monitor the state of the crypto market through charts and look for indicators for the next best opportunity to sell or buy. The process of understanding market trends is complex and usually leads to different interpretations considering different variables. Though countless theories are applied, there will always be two simple concepts that are universally understood and act as the basis for all indicators, namely bull and bear.
Words ‘bull’ and ‘bear’ are thrown around the most among crypto traders when discussing the state of the market. Each of them refers to the direction of the price rate trends. Their descriptions are indisputable because they are easy to observe. If you’re new to trading, be it crypto, stocks, or securities, then you will find yourself asking ‘what do bears and bulls have to do with prices?’ Here’s what you need to know about these terminologies:
Bull market meaning and etymology
The market is referred to as ‘bullish’ or a ‘bull market’ if the prices are trending upwards. This counts all the times that the crypto is sold at a lower rate, dropping the market rate temporarily. As long as the closing prices on the market show that resistances are developing upwards, then it counts as a bullish/bull market. It’s the perfect opportunity for traders to sell for profit, as well as for Bitcoin live casino gamblers to cash in their winnings.
Another use for the word ‘bull’ is referring to the trader who bought the dip in anticipation of a reversal. They are then called a ‘bull investor’ which is not an official title unless the person plans on practising the same strategy consistently. The bull market is what everyone desires for cryptocurrencies. For a time, Bitcoin (BTC) and Ethereum (ETH), two of the top assets in the crypto market, experienced this until they reached an all-time high in November 2021.
The most universally agreed upon reason why this is called a bull market is because of how the animal it’s named after attacks. Bulls lower their head in anticipation to strike. When the opportunity arises or when the target is close, he lunges with an upward swipe of its horn. It’s a great analogy for traders anticipating the upward market trend.
The bear market is the opposite of the bull market. It’s the observation that prices are going down continuously or abruptly with big losses. It counts all the closing prices that ended at a lower rate than the previous one with risks of creating a new floor. It can be further identified as either a crash or a dip based on several nuances:
A crash is a sudden drop in prices. Although short, the margin it created can cause panic among investors of the crypto. A dip, on the other hand, is a sustained downward trend, usually following a long-term bull market with chances of reversing near the price floor.
Crashes usually happen because of overselling, causing the supply to outgrow the demand. Dips happen when demands are already met and the market is waiting for the next reason to buy more assets. Reversal tends to happen because even first time traders buy crypto when the prices are low or because the market created new demands for the asset.
Among the most popular cases of either is when online gambling became popular. Gamblers buy the dip to use cheap Bitcoin at Bitcasino slots and sell the winnings at a later date. Bitcasino bonus offerings also helped promote this practice because of the match deposit scale with the size of the funds. Thus, the more crypto you send, the more free bets you get and this is easier when Bitcoin prices are low.
The downward trend is called a ‘bear market’ because of how the creature it’s named after fights in an opposite fashion to the bull. While bulls lower their head to strike upwards, a bear stands tall then swipes or slams its upper body down its prey. It works as an analogy for crypto prices because a downward trend comes only when the asset’s economy is strong.
Factors affecting bull and bear market
The crypto market is affected by a lot of factors and market trends are simply the result of their collective influences. Understanding what they are and how they affect the market can give you insights in properly evaluating market trends. You can find indicators more efficiently and successfully predict the crypto market’s direction.
Here are some of those factors which all traders keep an eye on:
Prices per asset
The value of every crypto in a day can change in a range between cents to hundreds. This is usually based on how much people are selling and buying the asset. Individuals’ decisions affect other traders because they have to compete with other traders to get profit. Thus, pricing crypto is like bidding for both sides. A seller would want to trade with a buyer who’s willing to pay higher than other buyers while they want to look for sellers who are willing to sell the crypto at the cheapest rate. This continues until the trade volume is large enough to influence the entire economy.
Whether the market trends appear as either bull or bear can also depend on how far into the past you are willing to look into. If you are to glance at Bitcoin’s price since release, then the chart would look like it’s in an eternal bull market. Limit that scope to a month or year (preferably a year) then you’ll have a clearer view of its direction.
Companies and corporations have huge influences on the crypto market because they also participate in its economy. Likewise, traders need a primary source of income and being an employee is one of the best ways to secure that. Therefore, productivity in the workforce has a positive impact on the crypto market.
The strength of the economy is measured by its diversity of income sources and interdependent actors. In the case of cryptocurrencies, digital assets are borderless, giving it one of the most accessible economic networks of all kinds of assets. There’s also the variety of crypto available in all exchanges, each with its own uses in the blockchain-based economy.
Public image of the asset
Volatility of cryptocurrencies makes them amazing long-term stores of value. It can reach high gains within a year and new all-time highs in a decade. However, its volatile nature is what makes it a challenging asset to predict in a short-term, thus the constant reversals between bull and bear trends.
One influential person’s post on social media is sometimes enough to get a discussion going, causing a direct effect on crypto market trends. This is a double-edged sword because the criticism that caused a bear market can just as likely be reversed by a promotion to cause a bull trend.
Investing in crypto during bull market
It’s generally discouraged to buy cryptocurrencies on a bullish market because it’s either bound to crash soon or because the profit you’re likely to gain is minimal. The best time to buy in an upward trend is when you’re near the time of the reversal. Buy as much crypto as you wish when the price is at its lowest, usually near the price floor, then sell when it’s nearing the ceiling.
There are still benefits to buying during a bull market and that’s to influence the growth of the asset you are investing in. If you have a lot of funds, then you can nudge the prices a bit higher by buying above the selling price. It strengthens the asset’s economy, thus giving other investors confidence in the crypto’s potential to reach new heights.
Investing in crypto during bear market
The bear market is not ideal for sellers but a great opportunity for buyers. Take this chance to diversify your portfolio to other assets. Doing so not only helps stabilise the crypto’s prices but also gives you other stores of value to sell during the next bull market. Having a diverse portfolio means benefiting from multiple sources of income.
Buying the dip is the safest way to ensure profit because the economy can only go up when it’s already down. Once you bought in, then you can sit back and just watch the market rise while holding onto your assets. You can occasionally multiply them by betting on Bitcasino slots and have more to sell later.
Bull and bear markets are market trends that take turns for all kinds of assets. Whether their reversals are fast or slow depends on how you wish to view the crypto trading chart. Long-term investors tend to set the table for months while quick traders minimise it to a week. Both approaches to viewing the crypto market are valid and use varying theories to find patterns. If you want to benefit from both bull and bear markets, then you should learn how to look for crypto chart indicators to predict the next reversal.
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