Have you always wondered why that pretty, smart girl you follow on Twitter keeps tweeting about bull runs and bear crawls?
No, they aren’t matadors or zookeepers; they are market traders.
“Bull” and “bear” are general terms that transcend different financial markets like stocks, cryptocurrencies, forex, and real estate.
Over the years, these terms have been used to largely categorise and report on the general performance of these markets.
What is a bull market?
In crypto, a bull market is a situation where the prices of cryptocurrencies are moving in a sustained upward trend at a given point in time.
In simple terms, during a bull market, the prices of cryptocurrencies keep increasing. This was what the crypto market experienced throughout the last quarter of 2020 and even into 2021.
Due to the high volatility of crypto markets, a bull market is not declared until there is a substantial upward movement in the price value of a crypto (usually 20% or more).
In a bull market, investors steadily buy the crypto coins, demand is fast overtaking supply, and the confidence in the coin’s future is high.
These actions and emotions further drive up the price and extend the bull run.
During bull runs, you’d often see a lot of crypto investors predicting crazy prices and chanting that the coin is going “to the moon.” This just means that they believe the price of the coin will keep rising at an alarming rate.
Bulls are the ones you would hear shouting, “Buy the dip!” They believe that if the value of a coin decreases, investors should rush to collect as much as possible because it will only be a matter of time before the coin starts a bull run.
Bull markets are favourable to short-term and beginner investors as they can get value for their money and make a profit in a short time.
When crypto investors are optimistic about the value of a coin, they are said to be bullish about it and investors who believe that the price of a coin will increase over some time are called bulls.
However, bull markets do not last and can be triggered by many factors including investor confidence, new legislation and regulation, and unforeseen global events like natural disasters and pandemics.
There’s no clear explanation on why an upward rise in price is named after bulls, but the assumption is that bulls charge forward, with their horns held high, which connotes a quick and upward movement.
What is a bear market?
A bear market, basically the opposite of a bull market, is a situation in the crypto market where prices are suffering a downward movement.
In these times, the supply of coins is more than the demand and investor confidence is pretty low. Bear markets are caused by the reasons that end bull markets.
Many investors are usually sceptical of buying crypto coins at this time. This further drives down the prices of the coins.
The continued dipping of the coin prices is called a bear crawl. Bear markets are more difficult for new investors to navigate.
When investors enter the market during a bear crawl, there’s no telling just how far the dip will go.
When crypto investors are pessimistic about a coin, they’re said to be bearish about that coin. Pessimistic investors are called bears.
Bears usually advise everyone to sell their assets and make a profit as fast as possible.
Bear markets usually favour long-term investors as they can buy at low prices and sell when there is a bull run. In crypto speak, it is the time to buy the dip and hodl.
The bear market probably got its name from the way bears behave. Bears are known to move lazily except during hunting, and because they usually tower over their prey, they attack downwards.
Bull and bear markets are a normal part of the market cycle and will keep replacing each other for as long as demand and supply for crypto assets exist. As a crypto investor, you can make money from both market cycles with the right knowledge and a bit of luck.
