As someone who is new to investing in the cryptocurrency world , there are many terms that you should know. One of the terms you should know is Bull and Bear Market . But, what are Bull and Bear Markets?
Bull or bear market itself is a term that you will often or even find in the world of stock and crypto markets. Well, on this occasion, Coinomo would like to discuss a little about what a bull market vs bear market is . So for those of you who want to know the term, just take a look at the following review.
What is a bull market?
Bull market is a term to describe the state of the financial market when prices are rising or are expected to rise. Usually traders or investors call it bullish .
According to The Balance page, the market is said to be bullish when it has increased by 20% . This condition usually occurs when stock or crypto prices continue to skyrocket in a relatively long period of time.
When stock or crypto prices are predicted to rise, investors will compete to buy lots of stocks and cryptocurrencies that are predicted to rise in the near future.
Well, because of the many purchase requests from investors, this is what makes the price of a stock continue to soar. And that process is known as a bull market.
How to Take Bull Market Profits
Investors who want to profit from the bull market , of course, have to buy early so they can take profit when the prices rise.
Of course, it will be quite difficult to determine when an asset will increase or decrease. Well, here are some strategies that you can use to take advantage during the bullish period .
1. Buy and Hold
The first strategy that you can do when investing or trading is to buy an asset, whether it is a stock or crypto, hold it for some time, and sell it at a later date when the prices go up.
This strategy really involves your trust as an investor to have belief in the asset, and wait until the bullish time comes.
2. Installment Buy and Hold
Well, this is a variation of the direct buy and hold strategy. So in this strategy, you as an investor or trader can continue to buy an asset as long as the price continues to increase.
As long as the bull market continues and you can sell the assets later for a higher price, you will continue to earn profits. But, you have to keep an eye on the market movements and news constantly!
3. Retractment
A retractment is a short period during which the general trend of the price of your asset is reversed. So during a bull market , it is impossible for the price of an asset to just go up, there must be a period of time where the price will fall and then it will rise again.
Well, usually investors or traders will observe the retractment in the bull market and move to buy during this retractment period . The premise of this strategy is to assume that the bulls will continue, the price of the falling asset will rise again, and the temporary fall can give you a cheaper buy price.
4. Full Swing Trading
Full Swing Trading is arguably the most aggressive strategy you can try in taking advantage of the bull market .
In this strategy, investors or traders will take a very active role, namely using short-selling or other options or techniques to try to get the maximum profit during a bull run.
What is Bear Market?
The Bear Market is the opposite of the Bull Market. Bear markets are characterized by falling prices and are usually shrouded in pessimism.
Bear Market itself can occur due to many things. One example is due to a decrease in the confidence of investors or traders in an asset. When investors or traders believe something bad will happen to these assets, they will take anticipatory action by selling their assets to avoid losses.
Because many people are selling these assets, of course it will cause the price of these assets to decrease.
Why Called Bull and Bear?
The term bull takes a metaphor from the Bull, where fighting bull will attack by sticking his horns into the air. That is why a market with rising prices is called a bull market.
Whereas the term bear takes the metaphor of a bear who wants to bring down his opponent or prey. Bears will move their claws up and down to make their prey actually fall.
Differences in Characteristics of Bull and Bear Market
In a bull market , many investors are vying to get an investment asset whether it’s in stocks, crypto, or bonds available in the capital market. As a result of this, the price of these assets will increase due to the large number of requests.
Whereas in a bear market the opposite happens, many investors or traders sell these assets instead of buying them. The number of buy requests become much lower than the buy requests and cause the price of an asset to decrease.
The psychology of investors when the two markets occurred was also different. When there is a bull , an investor is willing to join the queue in the hope of getting a big profit.
Meanwhile, in times of bearishness , market sentiment can be negative due to investors selling assets or moving their funds from risky assets to fixed income security.
In addition, if there is a macro-economic condition that causes a general fall of market prices and affect the profitablity of all companies across the board, this will worsen the pessimism in the market and cause the asset value to fall further.
Bull market is exemplified by rising prices and market optimism. Investors would prefer to risky assets like stock or crypto. On the other hand, bear market is dominated by falling prices and market pessimism. Investors in this occasion, would prefer to put money in safer assets like fixed income.
Conclusion
Well, that’s a little explanation about the bull and bear market that you should know before investing in crypto. Now you understand about bull and bear market, come on and put it in practice on Coinomo . Coinomo has a wide variety of DeFi investment programs , crypto trading , and you can also learn about everything related to blockchain technology.
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