What exactly is a bull and bear market?

Like the stock market, the crypto market is divided into two types: the market is upward or better known as the Bull Market and the downward market so-called the bear market.

Because of their fighting posture, the bull normally gores up when it fights, similar to the rising crypto market. The bear on the other hand uses its paw to pounce on its prey same as the drop in prices.

So, what is a bull market?

A bull market, also known as a bull run, is a period of time when the majority of investors are purchasing, supply outnumbers demand, market confidence is high, and prices are rising. If prices in a market are rapidly going upwards, it may imply that the majority of investors are growing optimistic or "bullish" about the price rising further, and it may signal the start of a bull market.

The term "bulls" refers to investors who believe that prices will rise over time. As investor confidence improves, a positive feedback loop occurs, attracting additional investment and driving prices upward.

The signs that a bull market is coming to an end

Even during a bull market, there will be dips, corrections, and volatility. Short-term downward fluctuations are easy to misread as the end of a bull market. This is why it's crucial to look at any potential signals of a trend reversal in a broader context, taking a look at price behavior over longer time frames.

Bull markets don't last forever, and investor confidence will eventually dwindle – this might be sparked by anything from poor news, such as unfavorable legislation, to unforeseeable events, such as the COVID-19 epidemic and the Russia vs Ukraine war. A significant downward price movement might signal the start of a bear market, in which more and more investors feel prices will continue to decline, leading to a downward spiral as they sell to avoid more losses.

Now, what is a bear market, exactly?

Bear markets occur when supply exceeds demand, confidence is low, and prices decrease. As a result, pessimistic investors who anticipate prices will continue to decrease are known as "bears." Trading in bear markets can be challenging, especially for rookie traders because it's difficult to anticipate when a bear market will finish and when the lowest price will be reached since rebounding is typically a gradual and unpredictable process impacted by a variety of external factors such as economic growth, investor psychology, and global news or events.

However, they can also bring opportunity. After all, if you have a long-term investment strategy, buying during a bear market can pay handsomely when the cycle reverses. Short-term investors should be on the alert for transitory price surges or corrections. For more experienced investors, there are tactics such as short selling, which is a manner of wagering on an asset's price falling. Many crypto investors use cost averaging, which involves investing a predetermined amount of money (for example THB1,000) every week, regardless of whether the asset is gaining or dropping. This spreads your risk and enables you to invest in both bull and bear markets.

Start your venture in Bull and Bear crypto market today by creating an account on a trading platform such as XSpring Digital. XSpring Digital, granted with a license to operate digital asset broker and digital asset dealer services by the Ministry of Finance in Thailand and is regulated by the Securities and Exchange Commission, is a digital asset trading platform using blockchain technology for your digital asset trading and investments, providing you with convenient, safe, and secure digital assets trading experiences.