Crypto bear vs bull explained

Sometimes, bull and bear markets refer to the market for a single asset, or group of particular assets, but mostly bull and bear refer to whole financial markets and sectors, or even entire economies. Bull and bear markets can last from a few months to many years each, and can vary in many ways.

From both a short-term hourly, daily and long-term monthly, annual perspective, markets operate in a cyclical fashion through upwards and downwards movements as the price of an asset is determined. Investors and companies have a positive outlook about the economy and financial markets in general. Consensus expects that prices of individual assets — stocks, crypto, gold, for example — are all generally on the rise.

People have more capital to spend, and they spend it optimistically; they feel that the present upswing could keep getting better and better. If someone is bullish or described as a bull, they are optimistic that prices of assets will continue to rise over the long term, or over a specific period of time. Prices may drop continuously, while investors generally believe that a negative trajectory will continue. During a bear market, investors are generally pessimistic about the future and are more averse to risk than they might be in a bull market.

Although the general nature of a bull or a bear market is distinguished primarily by the direction of asset prices, there are other characteristics that are important to consider. A bull market or bear market framework represents parameters for understanding market sentiment, but that sentiment is contingent upon a number of co-existing factors.

For example:. Small movements might represent a market correction — a short-lived trend that usually lasts less than a few months. In a bull market, there tends to be strong demand for assets, but weak supply. As a result, prices will rise. In a bear market, more people are looking to sell assets than to buy. The demand is significantly lower than the supply. As a result, prices drop. However, as the supply and demand ebb further in one direction, the more probable an eventual turnaround becomes.

For example: As prices of an asset go up, so can selling pressure from investors taking profits, which increases the supply. Investor sentiment and market performance are interdependent. In a bull market, investors flock to buy and sell assets with the hope of gaining a profit.

For example: A bearish stock market is typically associated with a weak economy. A weak economy can lead to decreased consumer spending, which generally means lower profits for businesses, which in turn can decrease overall risk appetite for speculative investments.

In a bull market, people have more money to spend and are willing to spend it, which has the effect of strengthening the economy. Small movements are generally just a correction. A correction is not the same as a bear market. Moreover, markets often stagnate and remain steady before they validate a particular trend direction. In such an interim, the string of small upward and downward movements cancels out any gains or losses, resulting in a flat market trend that can continue for periods that are even longer than the bull or bear markets themselves.

Because prices are trending lower in a bear market, you might make some purchases that could prove beneficial in the long run. The issue with investing in a bear market, however, is that you don't know how long the dip will last or how far the prices will drop. The majority of traders target to sell currency to ensure profit taking. In a recent talk with an investor I asked whether he invested in startups these days, and he said that investments in crypto and other instruments were much less profitable now.

So my recommendation is considering cryptocurrencies as a means to spread investments and thus ensure reasonable risk management. In a bull market, investors are more confident in the future as they expect prices to continue growing for a certain period of time although predicting trends is actually quite hard. The key persistent driver for new bull trends is the increasing acceptance of bitcoin and other coins as a payment instrument and investment assets, and usage of blockchain technologies and applications in new business domains.

Legislative and tax changes to which the market responds immediately are also important. In fact, there are not so many instruments yielding actual profits nowadays: if you compare deposit rates offered by European banks and look at the terms and conditions proposed by Ukrainian and Russian banks, you will get the idea that the chances of earning is slight.

Moreover, depositing a larger amount of savings is even dangerous as the risk of losing them all is quite high. I would like to stress the modern trends once more. The market is quite volatile now, and there is a selection of countries where crypto transactions are not subject to tax, countries like Singapore, Portugal, Malta, Malaysia, Belarus and Ukraine.

A community to discuss the future of financial services and any other interesting trends, strategies, ideas, views. Jimmy Huang. Luke Watson. Ian Coupland. Alistair Catto. Blog article. News in your inbox For Finextra's free daily newsletter, breaking news and flashes and weekly job board. Sign Up. Channels Cryptocurrency Markets. Trends in Financial Services. External what does this mean? This content is provided by an external author without editing by Finextra.

It expresses the views and opinions of the author. Bear trend : time to invest or an unjustified risk? How does one identify a bearish trend on time? Best behavior for beginner investors : Should you decide to test your luck in the cryptocurrency market, you need to explore trends, research key indicators and seek advice from professionals. Thorough preparation is the best way to tackle the bear market volatility. While others start panicking and taking rash decisions, you will have a reasonable business approach and will be able to analyze the market situation from a technical point of view.

Or you could refer to an advisor and become knowledgeable in basic notions and events in the market. Diversify your assets and investment strategies. Even though most investors perceive cryptocurrencies as a nice addition to the traditional asset portfolio such as shares and bonds, many forget about the need to diversify those digital assets. In fact, there are multiple variants of crypto investments which vary significantly in terms of risk and prospects: for tokens, it is reasonable to get a set of reliable tokens such as bitcoin and ether, and a few altcoins with a strong growth potential; tokenized assets — traditional classes of assets, real estate for instance, are tokenized quickly and thus their liquidity is increased.

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