“Bull” and “Bear” in trading terms implicit the idea of how financial markets perform in terms of price action, whether it is rising or falling. However, from an investor’s perspective- a bull buys shares because they are optimistic about the market and will rise whereas a bear sells because they are pessimistic about the market.
The fundamentals of bull and bear market in crypto are similar to the stock market. If you are not familiar with the crypto market – it is a capital market where you can buy, sell and exchange cryptocurrencies or digital assets like Bitcoin, Ethereum, Dogecoin, and more.
Crypto markets are highly volatile. Since the year began, the market has cashed multiple times and has wiped over 1 trillion dollars from the market cap, showing a bearish trend after a 2-year long bull run. However, this is the cycle of any market whether stocks or cryptos – a bull market is subsequently followed by a bear and vice versa.
In this article, we focus on the idea of bull and bear markets in crypto and the current scenario of the crypto market in India.
So, let’s begin…..
Bull Market Vs Bear Market
Well! Before moving on to the first-hand explanation of the bull and bear market in crypto first you need to understand what a bull and bear market means.
|It is the market condition when prices of financial products like stocks, bonds, and cryptos tend to rise
|It is the market condition when prices of financial products tend to or start to fall out
|The main reason behind it is buying large quantities
|The main reason behind it is selling off large quantities
|The prices of financial products start to rise
|The prices of financial products start to fall
|Good time to invest for the best profits
|Risky time to invest but veteran investors can still make a good profit
|Investors usually put more money to book high profits.
|Investors close up their holdings quickly to minimize the risk.
Candlestick charts are a great way to identify bullish or bearish trends in financial markets. The overall concept of bull and bear markets originates from the basic idea of demand and supply. When people buy a particular asset in a market, they tend to create a buying pressure in the market and when people sell an asset, they tend to generate a selling pressure.
At any given instance in the market, some people buy a particular asset and some sell it. If the buying pressure is greater than the selling pressure, the price starts to move upwards and can be observed through the green candles that appear in a candlestick chart. This upward price movement of an asset indicates a bullish trend.
And when the selling pressure is higher than the buying pressure for a particular asset, the price tends to move downwards can be observed in a candlestick chart through the red candles.
The difference between a bull market and a bear market is almost the same for any financial product.
Concept of Bull and Bear Market in Crypto
The best way to understand this concept is by looking at the market trends for 2021 – 2022.
From September through November, several crypto coins started to see huge upward price movement. For instance, the price of Bitcoin increased by around 60% in a short period (from $40,000 to $67,000). Ethereum, Binance Coin, and Solana, among other cryptocurrencies, all experienced significant price increases.
This was one of the most powerful bull runs in the crypto market but was followed by a huge bear trend.
At the end of 2021 due to the insurgence of the omicron variant of coronavirus, the crypto market saw a huge decline. Bitcoin had a collapse of more than 50% (from $67,000 to $35,000) during around six weeks, and many other cryptocurrencies also experienced a decline of similar magnitude.
Still, have doubts about the bull and bear market in crypto?
There is no difference between bull or bear trends in the stock market or crypto market. The fundamentals are the same in every financial product across every category.
The bull markets are charged by optimism, and investors consistently keep the prices high by increasing the buying pressure bear markets — occur when crypto prices fall 20% or more for a sustained period. Every bullish trend is followed by a bearish trend and this is a predetermined cycle in the financial markets.
Learn to Invest in Bull Market
It’s always best to spot trends early so you can buy early when investing in a bullish market. Later, just as the market is reaching its peak, you can sell at higher prices. Bull markets usually last for a long time, so any losses are typically small and transient.
What if something unexpected happens—like a crisis or a regulatory action—and you notice the beginnings of a bear market?
The best action in this situation is to reduce your holdings, particularly those in less well-established crypto. You might want to temporarily transfer your holdings into cash, precious metals, or other equivalent assets. This is because they stand a better chance of withstanding a collision.
Finally, keep an eye out for opportunities to increase your investments because cryptocurrency prices also tend to drop after bullish markets.
Learn to Invest in Bear Market
When prices are low and investors are less confident in cryptocurrencies, investing because a bearish trend carries a higher risk.
However, there is a chance that this risk could lead to greater future returns. As a result, you can buy cryptocurrencies at lower prices and sell them at the top of the following bull market known as “Short Selling”.
A different tactic employed by investors is to sell their current holdings as soon as they notice downtrends and then repurchase them at a much lower price as the market continues to fall.
But how long a bear market will last is impossible to predict, especially if it is being caused by a recession or other similar conditions.
The problem is that it’s unclear how long the dip will last and how much further prices can fall. As a result, you might buy something before you should or pass up a profitable investment.
Current Crypto Market Scenario in India
After the global crash of the crypto market in 2022, India’s position in the crypto market is not certain, the market condition is showing huge uncertainty and fear reflecting the bearish nature.
“India is in a unique position. Fiat on-ramp problems that exchanges are happening and are facing because banks are refusing to give us banking connections and volumes have dwindled, grappling with this global meltdown.” statement from Rajagopal Menon, the Vice President of WazirX Crypto Exchange.
As per a recent study, India is the fastest growing global crypto market in the world, and with the emergence of Web 3.0, crypto will play a major role show significant growth.
The bear and bull markets will continue with the same fundamental trends in every financial product. The growth of crypto as an industry is highly dependent on future market trends. And the upcoming trends will be very helpful for crypto investors in India.
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