What is a bear market?
You always hope that your investment in cryptocurrency will be worth as much as possible after you bought it. Unfortunately this is not always the case, it is often a guess what the price of a coin will do. When the market goes down for a long time and there is little confidence, we call it a bear market. This is not only the case for cryptocurrency, but also for the stock market.
In a bear market, there is little confidence in the market
A bull market attracts investors, a bear market does exactly the opposite. In a bull market, investors expect that their profits will increase and more and more people start to buy crypto. A bear market is characterized by a prolonged period of price decline. Often, there is also pessimism among the investors, as a result that a currency attracts very few new investors. If there are no new investors, the price of a currency will not rise for the time being.
A bear market occurs more often in a recession than under normal circumstances. Because a cryptocurrency was in the news negatively or because investors prefer to choose another currency, the price remains low or even continues to fall. Nowadays, there are many different cryptocurrencies on the market. In addition to Bitcoin, there are now more than 2000 altcoins, distributing liquidity across all of these cryptocurrencies.
In a bear market, the comparison is made with a bear. A bear catches its prey by hitting down with its claws. This is symbolic for the falling price. A bull catches its prey by throwing its horns upwards. That’s why a bull market stands for an upward trend.
What are the characteristics of a bear market?
- The prices continue to fall
- There is a lot of fear and uncertainty on the market
- Prices drop when there’s bad news
- Prices remain stable when there’s good news (or only rise slightly)
- Mainstream media talks negatively about cryptocurrency or does not talk about it at all