Identify A Bear And Bull Season: “Bull” and “bear” are typically used to express the current performance of the stock market — whether they are increasing or declining in value. In this context, a rising market is called a bull market, while a declining one is called a bear market.
Like many financial terminologies, the origins of the phrase are unclear. But most financial enthusiasts believe it is derived from the way each animal attacks: Bulls lunge their horns upward, while bears swipe downwards with their claws. There is of, course, a difference of opinion about the authenticity of the origin.
Identify A Bear And Bull Season
Given the volatile nature of the crypto market daily, the term Bear and Bull seasons refer to a longer period of upward or downward momentum of values of crypto assets over a long period. A 20% and above swing in either direction is the accepted standard for a bull or bear season in the cryptocurrency market.
A Bull Season
A bull market or bull run refers to favorable economic conditions in a particular sector. It means that prices are rising, demand is greater than supply, investors are buying and the confidence in the market is high.
In cryptocurrency, however, it is more common to see stronger and more consistent bull-run crypto phases. Typically, a bull run in the crypto market is when there is a 30% increase in price within one or two days. The crypto market is a volatile one so the accepted scenario for a bull market is different from other markets. Identify A Bear And Bull Season
During the bull season, investors known as bulls become optimistic and go “bullish” in the market and keep driving the price further up, during the bull season in the crypto market there are also favourable economic conditions on cryptocurrency, and bull runs may be driven by thing such as;
- Mainstream and pop culture support: there was a bull run in 2017 that was partly influenced by the likes of DJ Khaled and Paris Hilton and sitcom shows like The Big Bang Theory.
- Growing optimism from financial enthusiasts: JP Morgan’s strategies said Bitcoin could rally to as high as $146,00.
- Unique events that threaten traditional currency and finance: during the COVID-19 era, a lot of people turn to crypto amid the uncertainty in traditional finance and this contributed to the growth in crypto price during this period.
Identify A Bear And Bull Season
Characteristics of a crypto bull market
The typical attitudes and actions that characterize a bull market in the crypto space are:
- Substantial increase in prices over a sustained period;
- Strong demand amidst weak supply;
- Increased investor confidence in the market;
- Overpricing of certain projects;
- Prevalence of talks about cryptocurrency in mainstream media and social media;
- Endorsements by influencers, celebrities and people from other sectors who typically won’t have an interest in cryptocurrency.
- Hard rise of prices in the event of good news and a slim drop in prices in the event of bad news.
A Bear Season
On the other hand, 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 cryptocurrency crash in December 2017, when investors saw Bitcoin fall from $20,000 to $3,200 within few days. During a Bear season, the supply is usually greater than demand, investors’ confidence is low and pessimistic investors believe the price will keep falling. Bear markets can be difficult to trade in — particularly for inexperienced traders.
Typically, cryptocurrency traders strive to buy crypto assets during a bear market, especially during rock bottom. Nonetheless, it can be challenging to know the end of a bear market, making it hard for investors to take the risk and buy low-value crypto that may or may not recover.
Bear seasons tend to calm down eventually, and investors slowly gain confidence, starting a new bull cycle yet again.
Characteristics of crypto bear markets
The typical attitudes and actions that characterize a bear market are:
- Falling prices over a sustained period;
- Supply is greater than demand;
- Lack of investor confidence in the market;
- No talk or negative talk of cryptocurrency in mainstream media as well as social media;
- General distrust in cryptocurrency among economists, analysts and traditional finance;
- Lower highs in the event of good news;
- Lower lows in the event of bad news.
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