Bullish and Bearish Markets – The Two Sides of a Three-sided Coin
Because of how volatile and constantly changing the crypto market is (and certain forex pairs can be), one needs to know how to identify bull and bear markets.
What is a Bullish and Bearish Market
Does bullish describe prolonged periods of movement or is it short-term? The best way to describe “bullish” is that the investor expects the market or the price of a particular forex or crypto pair to rise. Bullish investors are frequently known as “bulls,” and likewise, bearish investors are referred to as “bears.”
However, “bullish” can mean different things. This term is especially true for short-term and long-term traders. A bull market is when given market (be it within forex, crypto, stocks, commodities, etc.) has a continual mark upward, generally lasting for several years. You can classify the period from March 2009 – March 2020 as a bull market. Conversely, bear markets tend to be, notably, more aggressive and last for a shorter period of time: typically, one to three years.
When an investor is bullish on a company for the long term, it means they have a positive outlook for the future. Not only that, but they may also believe the given (market) forex or cryptocurrency pair, or group of pairs, is currently overpriced.
Bearish Market Means
Investors who think a crypto or forex pair will decline or underperform are said to be “bearish.” A bear market is when stock prices fall, generally by a 20 percent (or greater) decline from recent highs. A good example of a bear market is the period from October 2007 to March 2009.
Is bearish sell or buy? It’s important to know how to identify bull and bear markets. In comparison, bear markets have shorter durations than bull markets. The periods can range from a few months to a year or two. Unemployment rates rise, and the economy takes a nosedive. These issues could be the results of poor economic policies or even natural catastrophes.
Bullish vs Bearish
Many people wonder how to tell the difference between bull and bear markets. Well, there are several ways to make investment decisions and determine if one is within a bull or bear market.
As any experienced investor knows, markets are constantly fluctuating, but it’s not because of bull or bear markets. In the event of a bear market, it might be of reasonable consideration to focus on short selling, or directing funds toward fixed-income securities.
Quite regularly, small gains and losses cancel each other out. Furthermore, markets could undergo substantial changes due to short-term trends or market corrections that may result in downward movements. Although bull and bear markets can last for extended periods (perhaps more so for bulls), either of the two market conditions can lead to positive results for skilled traders.
Is it Better to Buy Bullish or Bearish Assets?
Although the forex, crypto, and even stock markets consistently experience growth (bull markets) and decline (bear markets), there are blips and market corrections. However, they manage to perform well. But as you may already know, past success does not guarantee future success. These changes are indicated by substantial swings, either upward or downward.
With cryptocurrency, trends are somewhat different due to volatility of fluctuations. You can manage the ups and downs and still have lasting success, but you should be cognizant of the market’s direction. You may also need to have a long-term plan and a diversified portfolio. Cryptocurrency markets can move more quickly when bullish or bearish market trends emerge. As a result, you can easily identify bull and bear markets. It is also worthwhile to remain informed of fundamental signals or support for any given market you intend to trade.