“You never know what kind of setup market will present to you; your objective should be to find opportunity where risk reward ratio is best.” ― By Jaymin Shah.
The cryptocurrency market is a highly volatile playing field with multiple ups and downs that affect your market position.
While these trends are a part of the market, you need to know about them and get a hint of how to get through them without bearing much loss. The two market situations where individuals find it difficult to put up with the market is when they experience either a Bull or a Bear market.
Both a bull and a bear are tough animals, and the respective markets derive their name with the way each animal attacks.
When we think about these animals, a bull generally attacks the opponent with his horn up in the air while a bear charges by swinging down and their attacking posture are how the respective markets behave.
Let me explain this market situation in detail and share some points to get through these market conditions:
Bull Market Introduction
A bull market, also called a bull run, is a market situation where assets’ prices are on the rise. It indicates that the prices of assets are rising and are expected to increase further – A clear cut hint of a booming economy.
You can find a bullish trend in an individual cryptocurrency like Bitcoin, a specific sector like DeFi or the overall market.
But a bull market doesn’t necessarily mean an upside trend all the time; we may still see come fluctuations or consolidation but with no significant breaks in the trend.
Things to Know In A Bull Market
- Buy & Hold Strategy
Since the prices in this market situation are rising with small dips, it will only make sense to buy the dips and hold to see your investments grow. Although here, the idea is to know when to hold and when to sell.
- Don’t Get Swayed
A bull run looks very exciting, but that is when you have to hold your calm and not overbuy because nobody can predict the breakouts. If you overbuy any crypto and the charts start to show a sudden breakdown, then you will be in trouble.
Advantages of a Bull Market
- Long Positions
During a bull run, traders might take long positions for cryptocurrencies that they expect to soar. This will enable them to buy cryptocurrencies at its prevailing rate and sell it when it has grown in value.
Examples of a Bull Market
In the second half of 2020, Bitcoin experienced a rally and went up more than 200%, making quite a few new all-time highs before showing sign of settlement.
Bear Market Introduction
A bear market refers to a downward trend in the crypto market and indicates declining prices. This market situation often makes it difficult for investors to hold their position because of significant and continuous drops.
When we look at the bull and bear markets parallelly, you will notice that while the bull market’s upward trend is a slow and steady ride, the downward trend here is very harsh.
Because when traders find themselves in a bear market, they often rush to exit to either stay in cash or cash out their profits, creating a domino effect and leading to a mass-market exit.
Things to Know In a Bear Market
- Stablecoins Are an Option
If you can’t stand through the steeping market and would like to have cash on your side, then Stablecoins may be something that can interest you. It will help you protect your money because stablecoins are meant to keep up with fiat money.
You can convert your holding into Stablecoins and wait for the market to get back to normal.
- You Might Not Sell Out Everything
Bear market creates a lot of panic in the market, and the sentiments aren’t in favour of holding onto your cryptocurrencies.
But if you are a long term investor, then selling off everything doesn’t look like the right choice because eventually, the markets are expected to correct themselves. (not a piece of advice)
One thing that can come in handy to you in both bull and bear markets is Limit Orders; it can help you buy and sell at the price you want. In a bull market, a buy limit order can help you buy the dips, while in a bear market, a sell limit order can help you sell at a profit.
And the good news is that limit order is will be live a feature on CoinSwitch Kuber too, very soon!
Advantages of a Bear Market
- Get Hold of Assets at an Undervalued Price
A bear market might be an opportunity for you to acquire promising assets at an undervalued price. It will pay off when the markets correct themselves.
Examples of a Bear Market
The classic example of a bear market was the 2018 downturn when Bitcoin prices dropped as low as 80%.
The Bottom Line
Ups and downs are a part of a financial market, be it crypto or any other segment.
While these trends are not in your control, you can still get through them without incurring significant damage only if you take a few educated decisions.
FAQs on Bull & Bear Crypto markets
1. Is Crypto in Bull or Bear market in 2021?
The overall crypto market has grown 2X in the last year, and the market sentiments look positive as of the first half of 2021.
2. How to analyze a bear or bull market?
An upward trend with higher high and higher lows points to a bull market. Whereas a downward trend with lower highs and lower lows suggests a bear market.
3. Wil 2021 be a bear or bull market?
We can’t quite accurately judge what 2021 has in store for cryptocurrencies; we can only look at the past data and current news to make an educated guess.
4. Which Cryptocurrencies are in the bear market for 2021?
You can look at the chart performance of cryptocurrencies to determine which cryptocurrencies are in the bear market for 2021.
5. What are the factors that changes the bull market into a bear market?
After a bull run, assets tend to experience a correction; it is highly unlikely that the market will immediately enter a bear run after soaring
[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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