Are you keeping an eye on the cryptocurrency world but don’t know how to tell if and when a market is bullish (rising prices) or bearish (falling prices)?, In this Post we will go over all you need to know about bull and bear markets in the Cryptocurrency world
First of all, for those who are not familiar with what is a bull or bear market, I will show you an example of how to identify it.
Let’s say that the Bitcoin price was around $200 and dropped down to $120 (if we look at these numbers simplistically). This is then defined as a bear market because the price is dropping.
Now, let’s say that the Bitcoin price was $200 and then increased to $290 (again, if we look at these numbers simplistically). This is defined as a bull market because the price is increasing.
Table Of Contents
- Why Is It Necessary To Know What Is A Bull Or Bear Market In Cryptocurrency?
- What Is A Bull Market In Cryptocurrency?
- What Is A Bear Market In Cryptocurrency?
- 10 Factors Affecting The Cryptocurrency Market
- What causes Cryptocurrency to go up?
- What is a bear market in cryptocurrency?
- What Is Bull Run In Cryptocurrency?
- How is cryptocurrency generated?
- What causes Cryptocurrency to go down?
- What are the different types of cryptocurrency?
- What is cryptocurrency mining?
- How can you prevent cryptocurrency from going down?
- What is cryptocurrency trading?
- What is blockchain technology?
Why Is It Necessary To Know What Is A Bull Or Bear Market In Cryptocurrency?
The reason we need to know what is a bull or bear market in cryptocurrency is because some trading and investing strategies will work better with one and not the opposite. For example, if you buy on a bull market and the price begins to grow again, you will be able to take profit at a higher level than you initially bought.
The cryptocurrency market has seen many ups and downs in its relatively short history, which makes it a very unique market. One of the most important things you should know about cryptocurrencies is that they are extremely volatile and can appreciate or depreciate by hundreds or even thousands of percent. For example, cryptocurrency coins price can go from nearly $20 to about $3 and from there it increase to more than $200.
This is exactly why we need to know what is a bull or bear market in cryptocurrency, because it will help us make better trading and investing decisions.
What Is A Bull Market In Cryptocurrency?
A bull market is when the price of an asset increases over a period of time. This means that there are more buyers than sellers, which is why the price increases if there are more people willing to buy.
7 Characteristics of crypto bear markets
1. Volume Increasing
Since there are more buyers than sellers in the market, you can expect to see rising volumes which means that traders will increase their activities. This will lead to increased interest in cryptocurrencies and thus higher prices.
2. Price Increase
Since there are more people willing to buy cryptocurrencies in an active market, you can expect prices to go up. When it comes to bull markets, you will usually see exponential price increases which means that while the value of a cryptocurrency might increase by 1% per day during bear markets, the value of cryptocurrencies can rise by 5-20% or even more during bull markets.
3. Positive Market Sentiment
The market sentiment of traders who participate in active markets is usually positive which means that you might see more articles about cryptocurrencies, social media mentions and overall interest increase. As a result, you can expect to see prices increasing.
4. More Media Coverage
Whenever the price of cryptocurrencies go up, you will see more and more media coverage because that’s what the market expects to see.
5. More Information Sources
When it comes to bull markets, you can expect more information sources because the market will want more of everything which includes cryptocurrency prices, technical analysis, news etc. Since there are more people interested in cryptocurrencies during bull markets, you can expect to see an increase of information sources that are dedicated to covering them.
6. Increased Social Media Activity
The increased number of traders will also result in more social media mentions which means that you can expect an increase of cryptocurrency related articles on all social media platforms.
7. Bitcoin Dominance
Since Bitcoin is the top cryptocurrency in terms of market capitalization, it is likely that the value of other cryptocurrencies will follow suit. This means that if Bitcoin keeps going up, its value will also increase which means that you can expect the same from other cryptocurrency coins.
What Is A Bear Market In Cryptocurrency?
A bear market is defined as a condition in which there is a general movement downward in the prices of securities over a period of time. However, it is different from the abc correction that is usually part of market cycles.
A bear market can be caused by several factors including problems with exchanges for instance technical issues, hacking, government regulations and etc.
7 Characteristics of crypto bear markets
1. Volume Shrinking
When crypto prices go down, its trading volume goes down with it. There are fewer traders which sometimes leads to more volatile swings or even no movements at all.
2. Price Decline
The value of cryptocurrencies is usually closely associated with price, so if there is a decrease in prices, you can expect the value of most cryptocurrencies to go down.
3. Negative market Sentiment
The market sentiment of crypto traders is very important which means that if traders are pessimistic about the short-term future of a cryptocurrency, it will usually lead to an increase in selling activities which can decrease prices.
4. Less media coverage
If media outlets notice that the price of cryptocurrencies has gone down, they might stop writing about it. They will probably continue covering cryptos if prices are rising or stable/neutral, which means that you won’t see many crypto related articles if the bear market is in play.
5. Less Information Sources
You can expect to see less information sources when it comes to cryptocurrency prices because not many people care about prices going up or down. Cryptocurrency prices are usually covered in depth in case they skyrocket in value, but in a bear market, you might see less information sources which will therefore decrease the overall interest in cryptocurrencies.
6. Social Media Activity
Social media is a huge indicator of cryptocurrency prices because most people follow discussions on social media to get their information. If you don’t see any crypto related topics on social media, it means that crypto prices have decreased which means it might be a good idea not to invest in them at the moment.
7. Bitcoin Dominance
The Bitcoin dominance is another important factor that can influence cryptocurrency prices. If Bitcoin keeps climbing back to its former price levels, it is likely that the rest of the market will follow suit.
10 Factors Affecting The Cryptocurrency Market
1. Bitcoin And Blockchain Technology
The recent price dip is being blamed on Bitcoin not being able to handle high transaction numbers, therefore people have been selling their Bitcoin holdings. However, this is mainly because blockchain technology has not yet evolved enough for scaling solutions to be found. We are optimistic that it will happen relatively soon, but this remains a major challenge for cryptocurrencies in general.
2. Lack Of Adoption And Regulations
Lack of adoption and regulations play a huge role in determining the price points of cryptocurrencies. Governments have been trying to get their grip on blockchain technology, which has been a good thing for the most part. Nonetheless, if they fail to get a grip on it, cryptocurrencies will be in a crisis. In addition, if they try to regulate too hard, it might scare away some investors and push the price down.
3. Media Attention
Media attention is another factor that can have a huge effect on the cryptocurrency market. If mainstream media talks about Bitcoin or any other cryptocurrency, you will usually see an increase of value.
4. Government Regulations On Crypto Exchanges
If governments decide to regulate cryptocurrency exchanges, it will usually lead to an increase of price. Conversely, if they ban them or put too much pressure on them, the prices might go down as people will sell their cryptocurrencies and/or stop trading.
5. Market Manipulation
Another factor that needs to be mentioned is market manipulation. It might not directly affect the price, but it affects trading activities which can indirectly influence prices. We have been talking about this a lot lately as some big players have been accused of manipulating cryptocurrency markets.
7. Internet Infrastructure Issues In Some Countries
In case some countries experience internet infrastructure issues, it will most likely affect the cryptocurrency market. If people can’t access cryptocurrency exchanges or other related websites, they might panic sell which will lead to a price decrease.
8. Demand and Supply
Demand and supply are one of the most important factors in determining prices. If more people want to buy than sell, the price will usually go up for that specific cryptocurrency.
9. Crypto Exchanges
Crypto exchanges play a huge role in determining cryptocurrency prices. For instance, if more people want to sell than buy on an exchange, the price will go down. If there are more buyers than sellers, the price of that specific cryptocurrency will usually go up.
10. Production Cost
The production cost is another important factor that can influence cryptocurrency prices. If the production cost of a coin goes up, it will usually affect its price accordingly.
What causes Cryptocurrency to go up?
Cryptocurrency prices are influenced by many factors which can include demand and supply, FUD, trends, media coverage etc.
What is a bear market in cryptocurrency?
A bear market refers to when the price of an asset decreases over a period of time. This means that there are more sellers than buyers which leads to a drop in prices if there are more people willing to sell.
What Is Bull Run In Cryptocurrency?
A Bull Run is a term used when the price of an asset (usually cryptocurrencies) increases rapidly in value with little to no resistance. For this reason, it’s often referred to as ‘surging’ or ‘raging’. A bull run occurs after a period of generally declining prices, or when there are significantly more buyers than sellers for an asset.
How is cryptocurrency generated?
Cryptocurrencies are generated by mining which is a process where computers solve complex algorithms. When the algorithm is solved, you will receive cryptocurrency in exchange for your efforts.
What causes Cryptocurrency to go down?
If traders sell their cryptocurrencies in high quantities, then that might result in lower prices which can lead to an overall drop in cryptocurrency prices.
What are the different types of cryptocurrency?
There are several different types of cryptocurrencies including Bitcoin, Ethereum and many more.
What is cryptocurrency mining?
Mining refers to when traders use their computers to solve complex algorithms in exchange for a certain amount of cryptocurrency. Mining requires considerable effort since you will need special equipment and electricity consumption which is why it is common for traders to join mining pools in order to increase their chances of receiving cryptocurrency.
How can you prevent cryptocurrency from going down?
Cryptocurrencies are market based which means that the only way you can stop them from going down is by making a trade. If you want the price of cryptocurrencies to go up, buy them and vice versa.
What is cryptocurrency trading?
Cryptocurrency trading can refer to when traders buy and sell cryptocurrencies in the hope of obtaining a significant profit. There are different ways that you can trade cryptocurrencies such as using technical analysis or following the market sentiment which both represent effective ways of making money from active markets.
What is blockchain technology?
Blockchain technology refers to the distributed record that is used to keep track of cryptocurrency transactions.