Whether in cryptocurrency, real estate or stock`, the market can be described in two ways: the bull and the bear market. The bull market is simply a growing or rising market while the bear market is a declining market. Experiencing both market conditions are inevitable for any trader as you must experience the low of the bears to reach the high of the bulls.
Due to the market volatility, sometimes little spikes or decline in the market may be mistaken for bull or bear respectively. It is important to know the exact condition of the market at any given time so as to know what to expect. Having said this, let’s take a quick dive into what the bull and bear market actually means.
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WHAT IS A BULL MARKET?
A bull market or bull run signifies a market condition where there is increased buy pressure which leads to rise in prices of assets. This happens when majority of investors are buying and demand surpasses supply. During bull markets, prices rise due to increased investor confidence and positive sentiments developed around a particular asset or stock.
When investors begin to buy more of a particular asset, the price begins to rise thereby attracting more investors who tend to pump in more money into the asset in question. This further helps the price to rise higher. When investors feel optimistic or positive about a particular asset, it is said that they are ‘bullish‘ about it and these investors are known as bulls.
It is important to note that the bull market is driven by both positive sentiments and FOMO (fear of missing out). This simply means that an asset doesn’t necessarily need to provide a solution to a problem to attract investors. In some cases, simple positive announcements from recognized bodies can even trigger a bull run or a spike in a particular asset.
WHAT IS A BEAR MARKET?
A bear market or bear run signifies a market condition where there is increased sell pressure which leads to a fall in prices of assets. This happens when majority of investors are selling and supply surpasses demand. During bear runs, prices fall due to decreased investor confidence and negative sentiments developed around a particular asset or stock.
A bear run is triggered when majority of investors begin to sell a particular asset. As they sell, the price of the asset continuously falls thereby forcing other investors who wish to reduce their loses to also sell. This further dumps the price of the asset. When investors feel pessimistic about a particular asset, it is said that they are ‘bearish‘ and these investors are known as bears.
The bear market on most occasions is driven by negative investor sentiments. When investors begin to have negative perceptions or doubts about a particular asset, they tend to sell off. Unfavorable announcements from regulatory bodies or even announcements of misfortunes such as hacks can trigger a bear market. Sometimes, bear markets last for as long as one year.
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Experiencing bull and bear markets is inevitable for any full time crypto or stock trader. As earlier said, you must experience the lows of the bear market to reach the highs of the bull market. It is important to know the market condition at any time before investing. Also, following expert predictions is important for any investor. Investors are always advised to take profit when investing so as not to get caught completely in the lows of the bear market.
Both bulls and bears provide different opportunities for investors. Bears provide a good entry price for investors who want to invest in a particular assets and bulls provide a condition for investors to take lots of profit from their investments.