Investing can be tricky if you’re unfamiliar with all the terms used to describe all activities. As an investor, you need to monitor when a certain action occurs, such as a bull market, so that you know what the next investment move should look like. And, because the crypto market can be pretty unstable and unfavorable for investors who are not up-to-date with the latest changes, ignoring these terms and their meanings usually leads to losses. Knowing whether there’s a bull or bear market helps you get a grip of your preferred cryptocurrencies, so make sure you check the Ethereum price since it’s the second most trusted and known crypto.
But the crypto market wouldn’t be the same without the specific fluctuations. Depending on how well you read the charts and how prepared you are for investing or holding your assets at the right time, you can be a successful investor, even if it means not gaining a lot of money right away. The key to investing is to be consistent and aim to keep all cryptocurrencies balanced by having a stabilized portfolio. So it’s essential to know what the bear and bull markets are and how they act, which is why we’ll discuss their meanings, differences and opportunities for earning.
Bear market
A bear market occurring is known to be a bad sign for investors. There’s one theory on its name coming from a 16th century saying, “don’t sell the bearskin before you’ve caught the bear” when the term “bearskin” was used to refer to speculative stock buying.
In the crypto bear market, you need to be careful. The demand for cryptocurrencies decreases, along with prices, and there’s an overall pessimistic attitude about assets. The signs of a bear market you should be aware of include the following:
- Plunging prices over a longer period of time;
- Falling demand for most assets;
- Increasing negative media coverage that affects the prices;
- Plummeting investor confidence index;
Unfortunately, you never know what will be the next trigger of a bear market because the causes can vary, from global upheaval to government regulations. At the same time, you also don’t get to know when the bear market will end, which usually affects investors’ strategies as they start selling everything out of fear. Investing during the bear market can be challenging, but there are some tips you may consider:
- Depending on your risk tolerance, buy coins whose prices are devalued;
- To balance your portfolio, consider investing in stablecoins;
- Approach the dollar-cost averaging crypto strategy;
Bull market
The bull market is where the grass is greener. The term is thought to have been inspired by the upward motion of a bull’s horns, which showcases the surging prices and all directions on the chart are going up. During a bull market, investors’ sentiments are positive, which affects overall confidence. Learn when to expect a bullish market by identifying the following aspects:
- The prices are constantly rising;
- The demand for most assets increases;
- New investors decide to participate in markets;
- Positive media coverage sustains upward prices;
During a bullish market, the best thing you can do is stay connected on what happens worldwide and monitor the charts constantly. Most of the time, the causes of a bull market include positive media coverage. For example, when Musk tweeted about continuing to hold his Ethereum, Bitcoin and Dogecoin, the prices of these cryptocurrencies went up in a matter of hours.
However, bull markets are rare. The latest two bullish opportunities occurred in 2017, when the Bitcoin price surged from $1,000 to over $17,700 in only a few months. Then, again in 2021, when the total crypto market cap went from $772 billion to $3 trillion. It is expected that in the second half of 2023, the crypto market will see moderate improvement, benefiting all investors.
During the bull market, the best strategies you can try include the following:
- Buying early in the run for more chances of earning ROI;
- Taking profits immediately as the market starts switching to bearish;
- Setting a stop-loss order to protect your earnings;
How to invest during a bear vs bull market
The best advice for investing is to be aware of FOMO (fear of missing out) and not be influenced by this sentiment. When fearing losing essential assets, you are prone to making poor decisions, leading to a weak portfolio. Rather than hurrying up excessively, take time to reflect on your judgment and look at the situation objectively. No matter how much the bull market seems to take place, you never know when it will become bearish and put you at considerable risk.
During a bear market, sometimes it’s best to leave your investments alone for a while until things become settled. Although you may be tempted to check your account, this will only influence you to make a less likely good decision.
The differences between bear and bull markets
Trying to invest during a bear or bull market must be done cautiously, so you need to know that these two markets differ in terms of:
- Stock market performance, as prices rise in bull markets and go down in bear markets;
- GPD. Bear markets are closely linked to economic recessions when the GDP decreases. On the other hand, a rising GDP can showcase the occurrence of a bull market;
- Unemployment rates. During bull markets, businesses are expanding and hiring, but the opposite happens in a bearish one;
- Rate of inflation. Low demand in bear markets can trigger deflation, while high demand for products in bull markets can make the prices increase;
- Prevailing interest rates. Low-interest rates are associated with bull markets, while high-interest ones with bear markets;
The bottom line on bear vs bull markets
Mastering cryptocurrency investing means you need to know when a bearish or bullish market is occurring. The best way to do this is to be aware of how the overall economy acts and watch investors’ sentiments closely, then take a proper decision on what you’ll do with your assets. As long as you can balance it and refrain from FOMO-based choices, you’ll be able to maintain long-term gains.
The post Bear Vs Bull Market: Which One Is Better For Your Portfolio? appeared first on Datafloq.
