What is a bear market, and how do you identify it? What’s the difference between a bull and bear market? In this quick guide, we’ll take a closer look at what this term means in cryptocurrency circles. Hint: If you’re already knowledgeable in terminology related to the stock market, bear market has the same relevance when applied to crypto.
Bull and Bear Market Definition
A cryptocurrency bear market is usually defined as a sharp downturn that results in a decline that is 20 percent or lower than the market’s most recent historic high. Some definitions add that this type of decline is only a bear market when it lasts for two months or longer.
A bull market is the opposite of a bear market. Instead of declining, the market shows a rise in value, again by at least 20 percent.
Bull markets are indicators of investor confidence. You might hear that the market is “bullish,” meaning that the market is generally increasing as it has in recent years. Think of the way a bull forges boldly ahead and you’ll find it easy to remember this term as well as its opposite.
Just like rising markets are described as being bullish, falling markets are characterized as being “bearish.” This term is often tossed around when prices stagnate, too. If you hear that the market is “bearish,” this simply means that investors aren’t displaying as much confidence as normal. There’s less trading by volume and indices are falling.
Cryptocurrency Bear Market 2019
Despite long-standing bullish stock market trends, much of 2018 and the first few months of 2019 saw a very bearish cryptocurrency market that seemed long overdue for a correction. The bearish trend continued for so long that some small crypto exchanges opted out, discontinuing services. This wasn’t surprising, since the last day of December 2018 witnessed a combined cryptocurrency market cap decrease of 80% of the peak value of $813.8 billion. Since the drop, though, the overall market has regained stability.
As of early October 2019, the year’s trend has shown more bullishness than bearishness – in fact, Bitcoin prices nearly quadrupled between January’s low point and July’s high. Since reaching that high point, the market has shown some minor price increases and slight drops, but not a lot of action overall. This might not be the most exciting news for long-term investors, but lower prices can certainly be attractive for those who want to buy Bitcoin and other cryptocurrencies before the next major bull market trend arrives.
What about 2020? Because the Bitcoin halving will occur in May of 2020 with block rewards dropping from 12.5 BTC per block mined to 6.25 BTC per block mined, some market experts predict that FOMO will lead to a crypto rush that prevents another major bear market and leads instead to a bull run. But just like the stock market, crypto markets can rise and fall at any time, for any reason. Plan carefully by talking with an investment expert as you work through the decision-making process.