The cryptocurrency market is a chaotic and volatile one. There are many factors that can influence its price in any given day, week, or month. One of the most prominent is whether it’s in a bear or bull market.
The crypto market is currently in a bullish trend because it has gained its momentum, but there are many analysts that say that this may change soon. Meanwhile, the crypto market is still doing well, reaching all-time highs – evident from the current price of Bitcoin sitting at £46,502.91.
(Image Source: CoinDesk)
But what is a bear and bull market and how do you know you’re in one?
How do you recognize a bear market?
A bear market is characterized by a downward trend of the prices- evident from the graph above, for some asset that’s traded on the financial markets. This is when the buying pressure is low, the sellers are in the majority, and prices are tanking. The cryptocurrency market was in this phase because for most coins it’s all about bears. The entire market valuation had gone down by $150 billion in just one month. The entire cryptocurrency space is currently fluctuating by 90% creating all-time highs. Most coins were currently standing at their lowest or almost lowest price points but have since increased indicating a bull market on the horizon.
How do you recognize a bull market?
A bull market is one in which the prices of most assets are rising and this is what we’ve been experiencing for the past year. The crypto market has been increasing in value with increasing frequency and every time there is a dip people rush in to buy. This trend has been evident since Q1 of 2020 and hasn’t stopped since. The market has gone from $18 billion to over $300 billion- an increase of 3,500%.
How do you recognize the end of the bull market?
The end of a bull market is signalled by panic on the floor and large dumps, especially on coins that have been doing well. This will be followed by a bearish sentiment for some time before it begins to gradually pump again. The crypto market is currently experiencing this with Bitcoin and other major coins like Ethereum and EOS. There are many indications that we may be about to see a bear market and crypto has largely been performing well recently.
It’s hard to predict when any market will change its direction, but it’s clear that the crypto space is experiencing a bullish trend, but it may be on its way out. The market has been increasing for a year now and there isn’t any indication of when it will come plummeting into a bear market.
(Image represent stages of a bull market by Google Sites)
Expert opinions are mixed but the most common indicator of what will happen to cryptocurrencies is what happens with Bitcoin. If Bitcoin drops 10% people expect other coins to do the same, even if their value is far lower than BTC’s. Also , there are many short-term signals that can show an audience whether or not it’s time to invest in crypto.
As with all investments there are high risks and high rewards so it’s always best to do your research before placing an initial investment. Recently a crypto coin based on the popular Netflix program Squid Games was released- many investors rushed to buy the coin only for a rug pull to happen causing them to lose all their investments.
Why will the crypto market experience a bearish trend soon?
The crypto market will lose its momentum which will cause it to go into a downward trend. The price starts out high, but as more people invest it becomes overvalued. As such trading volume increases as well as the supply of coins available on exchanges which puts pressure on their prices.
Cryptocurrencies, when they trade on the open markets, are not traded in isolation. Most of them are traded on multiple exchanges so when one exchange’s market gets affected by a change in trading volume, this affects all its linked exchanges and the ones that it trades with.
The volume is decreasing because people are selling their coins. This makes analyzing market charts almost impossible to predict the future price. It’s so difficult to predict the prices of coins that are moving up or down because traders are getting emotional- they are emotional because they have invested in a coin and want it to go up, or they want to sell their coins off just before its price drops.
(Image Source: Daily FX)
The price of Bitcoin has seen some significant movements. For all the skeptics out there (you know who you are), this might be enough to make you reconsider your position on crypto. But for most of us, this means only one thing – trading! Whether it’s day trading or swing trading, we’re seeing an increase in interest in buying/selling/trading cryptocurrencies across all markets and exchanges alike.
But no matter what you do with your coins, be it investing or day trading them, you’ll always need to consider one factor: market conditions. Is the market bullish or bearish? That’s something that can’t truly be determined until the ultimate outcome has been reached. Market condition is the key to understanding the crypto market as it’s always important to know what is going on- smartphone apps are a great way to do this thanks to the advances of technologies and handsets with crypto wallets that make this possible today. You can buy or sell when you feel that there’s a drop in price and then when the market is back up again, you can jump in and take advantage of the low price and earn more money than what you originally invested.
Currently, with so many cryptocurrencies, it’s becoming harder and harder to determine which ones are good investments and which ones aren’t. With so many different types of coins produced with different features, it can be hard work at times trying to figure out which one is better for trading.
