What is a Bear Market (Season)?

A Bear Market (Season) is when a market experiences prolonged price drops. In this article, as Kriptokoin.com, “What is a Bear Market (Season)?” We will answer the question. In addition, we will touch on other questions about the project.

What is a bear market (season)?

A bear market is when a market experiences prolonged price drops. It typically describes a situation where security prices have fallen 20% or more from recent highs amid widespread pessimism and negative investor sentiment.

What is a crypto bear market?

A crypto bear market is one where the value of major cryptocurrencies has fallen by at least 20%. In contrast, a crypto bull market is one where major cryptocurrencies are bullish.

One of the most famous crypto crashes occurred in December 2017. Bitcoin has dropped from almost $20,000 to just over $3,200 in a matter of days. After that, it reached around $65,000 per token in April of 2021.

Traders aiming to time the markets aim to buy cryptocurrencies at the bottom of a bear market. Or it aims to buy other assets. But it’s often difficult to know when a bear market is truly over.

Why is it called a bear market?

The terms bull and bear market come from stock trading. According to some accounts, its origins come from the style of attack each animal uses. A bull attacks with its horns pointing up. A bear, on the other hand, rises above its rivals and slides down.

Similarities between crypto and stock bull and bear markets

Investors do not have experience with the performance of a cryptocurrency during a stock market. The last fact, the stock market occurred in 2007-2009. At that time, although Bitcoin was not yet accepted, it was a new market that attracted attention. While calling a bull or bear market in stocks or cryptocurrency requires technical analysis of values, there are a few more common to both markets:

Volatility

The value of both stocks and cryptocurrencies fluctuates over time. But cryptocurrencies tend to turn more severely due to market liquidity restrictions and a less established derivatives market.

Merchant Sense

Negative trader sentiment in both the stock market and cryptocurrency can herald a bear market. However, in both cases, opposing traders may view the market dips as an opportunity to buy the cryptocurrency at a discount.

External Effects

Bear markets in both stocks and cryptocurrency can reflect external factors that change the way investors value a particular asset. These factors may include general economic strength, interest rates, or geopolitical factors.

What are the signs of a crypto bear market?

One of the most famous adages of all investing is “buy low, sell high”. That’s why it’s important for crypto investors to know when a bear market is coming. At the same time, knowing that it is about to end can change everything. This is where the relative youth of the crypto market complicates things. In the stock market, economists, analysts and traders have decades or even centuries of data to sift through to find trends and triggers that occur just before a bear market turns bull. The opposite is also true.

Some warning signs of a crypto bear market include:

Lower trading volume: This may indicate that people are starting to hold onto their cryptocurrencies due to market uncertainty.

“Backback”: Occurs when the price of an asset in the futures market is lower than the current market price.

Death cross: A technical indicator where an asset’s 50-day moving average crosses its 200-day moving average.