The concept of bullish and bearish markets has its base in stock markets. And, these two terms have also found their way into the cryptocurrency domain. The nature of the two animals plays a role in the naming of these two concepts.
Bulls are known for raising their horns and charging forward immediately when it’s time to fight. Conversely, bears lift their paws to strike down the opponent in the air.
A trend represents the direction of price changes within the market. Trends are very relevant in the cryptocurrency market. Digital assets are extremely volatile because of a wide range of factors.
Governmental legislation and public acceptance of cryptocurrencies influence their prices largely. Finance-based enterprises are integrating bitcoin, Ethereum, and other altcoins into their range of services. For these reasons, the cryptocurrency market keeps evolving as prices rise and fall.
A bullish trend denotes growth in the price of a cryptocurrency stock or asset over some time. You will see a positive or upward or positive price movement. This kind of market denotes optimism. Investors in a bullish trend have the confidence that prices will increase in the long run.
In the same way that bears charge at their opponent, participants in the market cause their resources to lift the price of a cryptocurrency. In 2017, we saw a massive bullish market as bitcoin skyrocketed by massive percentages.
Everyone was trying to acquire massive returns by purchasing upcoming cryptocurrencies. Bitcoin rose from less than 1,000 euros to over 16,000 euros. The best thing to do in a bullish market is to buy coins or tokens early in the trend.
This way, you can take advantage of the rising prices and sell them when they hit their peaks. Most of the time, minor retracements can occur in a bullish trend. However, it is easy to recover from these temporary losses.
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A bearish trend is the exact opposite of a bullish trend. A bearish market is one in which the price of a crypto coin decreases over a period. You will observe a downward price movement.
A bearish market portrays pessimism. When bears fight, they try to use their paws to strike down their opponent.
Bearish people have faith that the prices will fall in the future. 2018 was a typical bearish year for bitcoin and other altcoins. Several investors lost confidence in bitcoin in that year because its price dropped sharply.
For cryptocurrencies and any other assets, a bearish market is more dangerous for investors than a bullish market. Prices continually drop and you can’t predict when there will be an upturn. You would have suffered a lot of loss before things reverse.
Combination Of Both Trends
You can heave a sigh of relief that cryptocurrency markets are usually an alternation of bullish and bearish trends.
A small drop in price doesn’t signify a transition from a bullish to a bearish market. If prices continue to go in a direction for a long time, we can begin to call it a bullish or bearish trend.
If you plan to invest in cryptocurrency markets in the future, do sufficient research and seek help from finance experts. Explore various past trends and look out for indicators of a massive price change.
While others are panicking to sell or buy their assets, you need to develop confidence in your strategy by approaching the market from an analytical viewpoint. Also, invest in a wide range of digital assets and evaluate their risk/reward ratio.
Keep in mind that you will incur both profits and losses while trading. Your goal should be to maximize your profits and cut down your losses drastically. And be careful not to invest a large portion of your savings or earnings in digital coins as you can lose everything in a flash.