What is Bear and Bull Market?

Basic information

Bear and bull markets refer to the falling and rising market cycles. “Bear” indicates a falling market and “bull” indicates a rising market. These basically reflect the market price trends, i.e., the direction the price in the long term.

The US stock market has an easy tool for distinguishing between a bull market and a bear market. If the S&P 500 stock index falls 20% under its maximum price (ATH – All Time High), it is a bear market. This index represents the condition of the 500 largest US stock companies. And since the crypto market has recently started to correlate with the stock market, it can be assumed that if the S&P 500 goes down, so will crypto and if the S&P 500 goes up, crypto will follow.

However, bull and bear markets are all about emotions. Let me show you.

Prices are dropping and you watch them get lower and lower every week. If you look at the candlestick chart, it’s one red candle after another. In addition, since the beginning of 2022, you have caught yourself hoping a few times already that the market is now heading towards new maximum prices. Nevertheless, a series of red candles appeared again, and the price went even lower. Moreover, social media began to discuss terrifying scenarios of how much more the price could fall. Anyone who hasn’t sold their cryptocurrencies is feeling more and more worried about their losses.

This is how a bear market can be described. The opposite of such a market is a bull market. The principle is the same, only different emotions are awakened in you. Fear of loss is replaced by the feeling of FOMO – fear of missing out. It feels like something is slipping away from you. Something you feel the need to be a part of. Something that if you miss, you will lose the opportunity to get more money.

It’s the overwhelming feeling that often drives people to buy investments when the cycle is about to turn bearish. This is why it is important to understand the bear market and bull market. You will reduce the risks and increase your chances of grabbing something for yourself from the market.

Before we talk about what bull and bear markets really look like, let’s see if you recognize yourself in the following scenario. It is a situation that everyone has experienced. We all have a story like this, and by sharing our experience, we can help the newcomers. More information is available in our Premium section – Crypto world basics.

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