What’s in a Crypto Bear Market?

Several crypto collapses have happened since the debut of Bitcoin in 2009, including ones that totally wiped out certain altcoins. Investors aren’t fully aware of these collapses since they occurred in less well-known kinds of crypto or didn’t get much media attention.

While there have been a number of highs and lows, Bitcoin has not seen any long-term bear markets.

What does it mean?

In a crypto bear market, key cryptocurrencies like Bitcoin value has dropped by at least 20% from their recent highs and is still declining. It’s important to note, however, that a crypto bull market is one that sees the most popular cryptocurrencies gain in value.

Bitcoin’s price plummeted from about $20,000 per coin to a little over $3,200 in a couple of days in December 2017. Bitcoin continued to rise, hitting $65,000 per coin in April 2021 before falling down to $32,000 in May.

Market timers buy cryptocurrencies and other assets when they are at their lowest points in a bear market, but it may be difficult to determine when a bear market has finished. Bear markets are also usually the time when traders try to buy coins because of the low price. When it comes to this, convenience is always the key. Bitcoin Era can be reliable in terms of a seamless experience. 

Why is it referred to as such?

When it comes to stock trading, the names “bull” and “bear” are used to describe bullish and bearish markets, respectively, according to various reports. A bear, in this particular case, being an animal, looms above its adversaries and swats them away.

Crypto and Stock Bull & Bear Markets

Investors have no idea how cryptocurrencies would do amid a downturn in the stock market. The year 2007-2009 was the last time there was a long-term bear market in the stock market. When Bitcoin was first introduced, it was receiving interest but not widespread acceptance. While technical analysis of values is required to determine if the stock or cryptocurrency market is bullish or bearish, there are some additional characteristics that both markets share:

Even if stock prices change over time, the volatility in cryptocurrency prices is greater because of the market’s liquidity limits and the absence of well-established derivatives.

A negative trader attitude may foretell a bear market in stocks as well as for cryptocurrencies. But in both circumstances, contrarian traders may take advantage of market falls to acquire cryptocurrencies at a lower price.

When the stock and cryptocurrency markets go down, it’s because of external variables that affect how much people are willing to pay for a certain item. Those considerations include the health of the general economy, interest rates, and geopolitical issues.

Given this, should you invest in cryptocurrency?

Cryptocurrency has a degree of inherent unpredictability that is absent from many other asset types. Even while no one expects authorities to shut down or limit the stock market or for hackers to get into a stock exchange, these are widespread fears when it comes to Bitcoin and other types of cryptocurrencies.

Bitcoin and other cryptocurrencies’ high energy consumption has fueled a growing discussion over the long-term sustainability of crypto, at least in its present form, which has raised worries about cryptocurrency regulation and blockchain security. When Bitcoin or other large cryptos have a severe decrease or collapse for a lengthy period of time, these existential worries are raised.

This existential scepticism, however, may also be a great asset for investors to have. Because of the uncertainty surrounding crypto, its price drops may be quite rapid. If you believe in the long-term development of crypto as a whole and can wait for the downturn, you may acquire the crypto of your choosing at a steep discount on a regular basis. Cryptocurrencies, such as Bitcoin, are seen as a long-term investment because of their expanding popularity and application.

Bottomline

The term “bear market” refers to a period of time in which supply outweighs demand and prices decline. Inexperienced traders may find it challenging to trade in down markets.

Since rebounding may be impacted by many external variables, such as economic growth, investor psychology, and international news or events, it’s impossible to tell when the bear market ends and when the bottom price has been achieved.

Cryptocurrencies, like any other asset, have ups and downs in their value. The symptoms of a bear market might assist short-term investors, in particular, in building a portfolio plan that is appropriate for their risk appetite and financial objectives.