What are “Bull” & “Bear” markets in crypto ?
Cryptocurrencies are often subject to volatile price swings, making them notoriously difficult to predict. However, crypto investors have developed a way of identifying whether the market is in a period of growth or temporary decline, which is known as a “bull” or “bear” market.
In this article, i will discuss in simple terms what are bull and bear markets, how to identify them, and how you can benefit from these two different tendencies.
If you are interested in investing in cryptos, it is capital that you understand how to deal with it, and decides what to do according to the period you are into.
If you understand, and determine in advance what to do when bull or bear market comes, it will be much easier to act without the influence of emotions.
Talking about emotions, it is really important for you to understand the concept of “FOMO”. If you are not familiar with it, or it you have never heard of it, I highly recommend reading this article :
What is a Bull market in crypto ?
A bull market is typically defined as a sustained period of rising prices. In the cryptocurrency world, a bull market is often associated with increased investor confidence and buying activity. This is when all crypto projects are rising, and prices are going up.
It’s the classic moment everyone is talking about crypto, and how Bitcoin revolutionizes the world.
What is a Bear market in crypto ?
On the countrary, a bear market is typically defined as a sustained period of falling prices. A bear market is often associated with reduced investor confidence and selling activity.
At this point, the mainstream media is negatively talking about Bitcoin and others cryptos, and how much of a scam it is. This is exactly at this point that you must be disciplined and implement your strategy you have planned.
How to predict markets in cryptos ?
There is no definitive way to predict when a bull or bear market will occur, but there are certain indicators that can give investors a general idea. For example, a sharp increase in the price of a particular cryptocurrency is often seen as a sign that a bull market is beginning, while a sharp decrease in price is often seen as a sign that a bear market is underway.
Investors who are able to correctly identify whether the market is in a bull or bear phase can often make profitable trades by buying or selling at the right time.
But how can you predict such a swift in the market in order to make profits on your investments ?
First of all, it is important to know that it is much easier to make profits on a large scale. Absolutely no one on earth can predict what is going to be the price of Bitcoin tomorrow. However, we can identify trends that can help you enter on the market at the good time, and sell on a profit.
The emergence of a new technological era
If you believe in Bitcoin and its technology on the long run, then you have to believe in its long term development. Imagine yourself being early 2000, strong believer in internet, computer and phone technlogies. Investing in tech / internet companies such as Apple or Microsoft would have been such a good investment.
Most people from technical jobs inside Blockchain consider our period now as web.3, the new era following web 2 explosion. We are probably now living another technological boom with these new inventions.
In order to benefit from that, you don’t have to be a professional trader. You just need to understand when to enter the market, and when to sell to make profits, on a large scale.
When is the next bull or bear market ?
On this section, i will discuss how to identify a turning point making the transition between bear and bull market, on the crypto sphere.
Warning : This is not an exact science. This theory is my opinion, and must be taken cautiously. The ideas shared here are not financial advice, but general knowledge i have gathered through years of experience in crypto & blockchain fields. It is not a “get rich quickly” theory. Through my work here, i want to help people to identify patterns in crypto finance, and make better and healthier choices regarding their investments.
If you are patient enough, you will be rewarded. Be aware that trading / investing in crypto is is a ruthless game where most of the players will loose their money. However, whose who win, will be very rich.
Most people are not patient enough, that’s why most of them loose their money.
Indicators and charts to predict a bull market
Here is some indicators that could help you determine wether or not we are in a bull or bear market :
- Is the mainstream media talking about Bitcoin or crypto ? If so, are they bullish or bearish ? If you hear bad new / no news on mainstream media, we probably are in a bear market. DO NOT invest your money when all the media are constantly talking about “crypto as a revolution“. However, if mainstream medias are negatively talking about crypto, now is the time it’s time to go against the grain.
- Use the RSI index. The Relative Strenght Index is an indicator to when the market is underevalued or overevalued. Read more here to fully understand it and how to use it :
- Use the MVRV. The Market value to realized value is a strong indicator showing if a market is overpriced or underpriced. Follow this link to understand how to use it :
- Check the 200 WMA : The WMA is the weekly average price on an asset for the last 200 weeks. It is a strong indicator to analyse long term patterns. Make sure to read this guide to understand it properly :
- Check the Bitcoin Rainbow chart showed above :
As you can see on this chart, if you only invested in bear markets, the blue section, and sold in the red part, you would have earned a lot of money each time. This is hard to have the discipline to stick to it because it takes years of patience between different cycles.
If you use these indicators on Bitcoin, you will be able to determine patterns in the cryptoshere. Bitcoin is the barometer of crypto adoption and development. Some altcoins will outperform it, but there is no bull run without Bitcoin.
If you carefully understand and use these indicators, you will be able to invest at the right time.
Read more about cryptocurrencies :