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The Top 3 Differences Between the Bull and Bear Crypto Market

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The Top 3 Differences Between the Bull and Bear Crypto Market
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We’ve all been there. Every newbie or experienced crypto trader or investor has come across the terms, bear market, and bull market far too often. The bull and bear crypto market always have massive effects on the mindset of investors. 

Since the crypto market is very volatile daily, a bear or bull market usually refers to longer periods of price change. Let’s talk about the bear and bull markets and how they differ from each other today.

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What the Bull Market is

A crypto bull run is simply favorable crypto market conditions. What this means is that the crypto market or the price of a crypto asset at that period is on the rise. It’s usually followed by investors being positive about the crypto market. What do you think a bull market looks like? 

Bull and Bear Crypto Market: Bull Market
Photo by Hans Eiskonen on Unsplash

A 40% increase in price within days or weeks can be a likely scenario. The term “bull market” comes from the fighting style of a bull where it attacks head-on with its horns in an upward motion. During the bull market, investors and companies have a positive outlook about a particular crypto asset and many believe that the price of the assets will continue to rise over the long term. 

For example, when bitcoin hit its all-time high of $69,000 on November 10, 2021. So many people believed that the price of Bitcoin would keep rising and surpass the $100,000 mark before the end of the year. Such optimism around crypto-assets with a continued increase in price is what you call a bull run.

The bull market is usually represented with an increase in price over a sustained period, strong demand for a coin despite weak supply, increased investor confidence in the market, and price speculation across social media.

What the Bear Market is

A bear market on the other hand is a period where there is a decline in the price of a crypto asset over a sustained period. An example of a bear run is the recent fall in the price of Bitcoin from its all-time high of $69,000 in November 2021 to $37,938 today.

Some investors identify a bear market when there is a dip of more than 20% from previous highs over some time. The term “bear market” comes from a bear’s fighting style – starting high, then attacking with claws downward and all its weight pushing down.

Bull and Bear Market: Bear Market
Photo by Hans Eiskonen on Unsplash

As prices drop, people begin to lose faith that the price will recover. This causes many to panic and sell out their holdings, which further creates a downward trend. However, bear markets calm down over time. Cryptocurrencies with strong fundamentals recover and as investors slowly gain confidence, a new bull run starts. 

You might wonder what the difference between a bull run and a bear market is.

Bull and Bear Crypto Market: Key Differences

Some find it hard to see the difference between a bull run, a retracement, or a bear market. Here are some notable differences between a bull run and a bear market. 

In a bull market, the demand for cryptocurrencies is strong even when there is a weak supply. A lot of investors want to buy crypto, but few are willing to part with them. This drives up prices further as investors compete to buy what supply is available.

However, in a bear market, more people are selling than buying. Demand is lower than supply, causing prices to drop further. 

Another notable difference is the difference in investor psychology. In a bull market, investors are beaming with confidence and brag about the crypto bull run on social media. Everyone is bullish on crypto with outrageous price predictions. 

Bull and Bear Crypto Market
Photo by Markus Spiske on Unsplash

However, in the bear market, the reverse is the case. Sentiments towards crypto are negative. Some sell out of panic which further brings the price as demand is low with huge supply.

One more difference I would like to point out is liquidity. Liquidity is simply the ability to convert a cryptocurrency to cash or other cryptocurrencies. A bullish market has higher liquidity as investors buy assets with the confidence of making quick and steady profits. 

The bear market has lower liquidity due to a lack of confidence in general market conditions. 

Tips to Consider During a Bull and Bear Crypto Market

There are a few terms to remember whether we’re in the bull or bear market. No matter what the state of the crypto market is, you should not let FUD and FOMO influence you to make bad investment decisions. The crypto market is more volatile and needs careful market decisions.

During bear markets, crypto investors often buy crypto assets when the prices are low and HODL to benefit when the next bull market approaches. One useful tip is to keep track of previous bull and bear market patterns. This can help you foresee future ones, or at the very least provide you with the best tactics to handle market fluctuations. Another excellent habit is to stay up with the most recent crypto news and learn from experts by reading about their tips and strategies.

One more thing: you can’t time the market. You can’t tell if you’re in a bull run or bear market until after a trend has definitively reversed. Try to time your investments by following a plan where you invest a fixed amount at regular intervals irrespective of which way the market is going. This strategy is called dollar-cost averaging, and it can be a useful tool in the changing tides of market cycles.

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