The difference between a bear and bull crypto market
What is Bull Crypto Market?
Bull refers to favourable economic conditions. Hereby, the investor sentiments are positive in regards to the continuous rise in asset values. In a bullish market, the price of security rises. Crypto markets are much smaller than stock markets and it’s usual to see a 40% incline in Cryptocurrency in a day or two. This is because of its highly volatile nature. The market bulls start a bullish phase in the crypto market. They continue to buy securities and the market continues to be in the bull phase till the supply exceeds demand.
A bull market is caused by investors who believe in crypto and continue to buy them at lower rates for an extended period of time. Since the market is volatile, the bull phase arrives quickly and is extended by continued investments. Favourable market conditions boost investors' confidence and result in a bull market. Crypto is generally driven by people’s confidence in the asset.
Key Characteristics of a Bull Crypto Market:
- Strong Demand as opposed to weak supply.
- Enhanced investor confidence.
- Visible interest in Crypto amongst celebs, high profiles, and influencers which is not otherwise the case.
- Cryptocurrency talks in mainstream media as well as social media.
- Increased prices for a prolonged period of time.
- Only a slight decline in prices in event of bad news.
What is Bear Crypto Market?
As opposed to a bull market, a bear market is characterized by declining assets value. The economic conditions aren’t favourable and people start holding off their cryptos. In certain situations, when the investor panics, they start selling off their holdings, which further creates a downward spiral. Due to volatile and short market share, there aren’t many trends to study in the crypto bear market. However, keep an eye on common indicators as they may bear the signs of emerging bear crypto markets. Government intervention brings about the highest insecurity in the crypto market. Further, due to market uncertainty, if people start holding their crypto, lower trading volumes would cause a bear pull market. Even the negative connotations by the traditional financial market bring about volatile changes in the crypto market. If the crypto’s price in the future market is low compared to its present price, it is surely a sign of an upcoming bear market. These and many other reasons contribute to creating an atmosphere for the bear crypto market.
Key Characteristics of Bear Crypto Market:
- Supply is more compared to demand.
- There is a lack of negative connotation in investors’ mindsets and the market.
- Zero discussion in mainstream media.
- The rise is low on account of good news.
- The lows are extreme on account of bad news.
- Decreasing price for a prolonged period.
Key Differences between Bear and Bull Crypto market:
The Crypto market moves faster whether it's in the bull or bear phase and each phase is short-lived. Owing to the speed of exchange and volatile crypto nature, these phases of assets
affect crypto differently than stocks. Apart from the usual indication of cryptocurrency prices, there are certain ways to differentiate between bear and bull markets.
Let’s understand that:
- Investors Outlook
There is an interlinked connection between investors' psychology and crypto’s performance. The increasing price in a bull market boosts the investor’s confidence and they invest in high-value crypto. On the contrary, when in a bear market, investors tend to sell their holdings and drive down the prices of crypto. This behaviour creates a panic in the market and the other investors follow the same suit.
Hence, the outlook of investors on the timings and value of crypto extends the bull or bear market run.
- Price of Crypto
A rising asset price is a sure shot way to predict an incoming bull run. Similarly, the declining asset price is a sign of an upcoming bear market.
- Market Scenario
When the GDP is on the rise, you can expect a positive bull pull in the market. Rising GDP increases revenue and thereby consumer spending. As a result, people are expected to invest more leading to a bear market. On the flip side, when the GDP is declining, revenue decreases, salary decreases and so does the people’s spending capacity. This would lead to a bear market scenario in general and crypto markets.
- Demand and Supply
It’s the simple law of demand and supply. When the demand for crypto is high but the supply is limited, Crypto’s are traded at higher prices. The competition to purchase what is available creates a surge in price which is an indication and further stretch for the Bull market.
On the contrary, when the supply is high but the demand is low, cryptos are traded off at low rates, causing a bear market. Bear in mind that highs and lows in Crypto are super quick and 20+% of incline or decline is usual. The continuous incline or decline could set a parameter to understand whether a bull or bear market is approaching.
Conclusively, the trends of crypto markets are hard to decipher as it differs due to susceptibility. Keep yourself updated with the latest cryptocurrency news and follow the experts' guidelines and tips laid by them. Everyone has their reason and ideology to invest while the market is in
bear and bull mode and, to be frank, each reason holds a solid potential. It ultimately depends on you, your research, and the selection of crypto that will decide the rewards for you.
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