Unless you’ve been living under a rock for some time, you’ve heard the terms ‘bull’ and ‘bear’ markets in the news or on social media. But have you ever wondered what they mean and how it affects your crypto investments? We’ve prepared an article to discuss these terms and how to deal with each market season.
What Does the Bull Market Mean?
The bull market refers to the season when crypto prices are skyrocketing, a perfect time to invest and earn from those investments. During strong crypto bull runs, you’ll see tokens increase by up to 50% in a few days. The term came from the aggression a bull has when charging its target.
A ‘bullish’ attitude usually dictates this season, where investors or ‘bulls’ bring in significant investments in the expectation of pushing the momentum forward. Confidence is also at an all-time high, with the bulls pulling more investors to bring the crypto project “to the moon.”
Many factors come to play when pinpointing the cause of a bull market, with investor optimism as the main reason. Celebrities and influencers promoting specific crypto can initiate a bull run if done correctly. Other reasons include stronger economies and low unemployment, meaning more people have the money to invest.
How to Spot a Bull Market
- Constant increase in crypto prices
- Growing demand for coins and tokens
- More investors entering the market
- High investor confidence
- Positive news improve prices, while negative news barely dent
Investment Tips on a Bull Market
When you spot a crypto bull run, it’s best to take advantage of the season the right way. Here are some strategies for you:
- Buy as early as you can for a better and longer return of investment (ROI)
- Understand that the bull market won’t last forever, so invest appropriately
- Pull out profits once prices start to dwindle, but keep a good amount in to maintain your investment
What Does the Bear Market Mean?
Coined from the downward motion of a bear’s claws when attacking, the bear market denotes a downward trend in crypto prices. The combination of low crypto rates and dwindling investor interest is evident, with more people selling their shares rather than buying.
Pessimism and skepticism characterize a ‘bearish’ attitude, with many ‘bears’ sharing their sentiments that can lead once thriving crypto projects into literal wastelands. Confidence of even the staunchest HODLers can start to waver during this season.
Similar to the bull market, several factors contribute to having a crypto bear market. Experts see fear as the main culprit, whether fear of the market’s direction or external events like regulations or controversies. Additionally, as crypto runs on hype, the loss of hype can lead to a bear market.
How to Spot a Bear Market
- Continuous price drops
- Low investor interest
- Prevalence of negative news on traditional and social media
- More bad news than good news
Investment Tips on a Bear Market
- Making crypto investments during a bear skid requires planning and risk-taking. Here are some strategies you can apply:
- Invest in stablecoins than in volatile coins until the season is over
- Make smaller buys on ongoing bases, also known as a Dollar-Cost averaging strategy
- Buy coins with decreasing value and encourage others to do so as well
- Cut your losses early on the bear skid
Make the Most of the Current Crypto Market
Adapting to changes is a crucial skill anyone in the crypto market needs. Whether on a bull run or a bear skid, learning to recognize and work with the market trend will help crypto investors take advantage of the situation.
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