If you are a cryptocurrency enthusiast, all you want to do is make some money. If you have been trading in the cryptocurrency markets for some time now, then by now, you might be familiar with the terms bull and bear run.
But if this is your first time here, it is essential to understand what these terms mean to grasp when and how to invest your money in such markets.
So what exactly does bull vs. bear market mean? And how will it affect your investments? Let’s take a look.
What Is a Bull and Bear Market?
A Bull Market is when the price of a particular cryptocurrency or asset rises. Hence, it is an excellent time to buy cryptocurrency. Conversely, a Bear Market (also called a downtrend) is when the price falls. The term “bullish” refers to an investor who believes that prices will continue to rise, while bearish investors believe that prices will fall.
The cryptocurrency market is volatile and unpredictable, with wild swings of 10% or more in a single day not uncommon. The two most common price patterns are bull markets (a period of rising prices) and bear markets (a period of declining prices).
A bear market is any sustained period in which the price of an asset falls usually as a result of speculation or oversupply and may be accompanied by other indicators such as high volatility and low trading volumes. Bear markets generally happen after a long-term bull market, when people are eager to buy new financial products to capitalize on their gains. As demand exceeds supply for these assets, their value proliferates until the costs become too great for those who have invested early on; this causes them to sell off their holdings at inflated prices that don’t reflect reality anymore.
Neutral markets are neither rising nor falling in value; they fluctuate between both sides based on market sentiment and other factors like news events. Although it may seem counterintuitive at first glance, there are three different types of market cycles: Bull Markets, Bear Markets and Neutral/Trending Markets.
How to Spot a Bull or Bear Market?
There are several ways to spot a bull or bear market. The first and foremost thing is to look at cryptocurrency prices. When the price goes up, it’s a good sign that you are in a bull market. If you see that the prices constantly rise and then fall, this is also a good sign of being in a bullish market.
The second thing to look at is trading volume and market cap. Both the metrics increase as more and more people purchase cryptocurrency. The higher these metrics grow, the more convincing it becomes that we may be in a bull market for cryptocurrencies, generally speaking (and not just one specific token).
The third way to spot if we’re in an upward trend or downward trend is by looking at sentiment both from media outlets as well as social media platforms like Twitter and Reddit to see how many people talk about Bitcoin’s upsides vs. downsides lately; if there’s been mostly positive coverage with lots of hype surrounding everything related cryptocurrency lately, there’s probably some truth behind all those headlines promising us millions overnight!
How to Handle a Bull Run?
The cryptocurrency market is volatile, and there are many opportunities to make money from the various fluctuations in price. It’s essential to keep in mind that no matter how well you think you’ve planned for a bull run (or bear), your investment plans could be turned upside down by external factors such as regulatory changes, hacks, or other unforeseen events.
So how do you protect yourself against these externalities? The answer is to diversify your portfolio as much as possible. One way to do this is by investing in multiple cryptocurrencies at once so that when one falls out of favor with traders, it doesn’t necessarily mean that all of them will fall too; another option would be hedging some of your bets by buying “inverse” contracts which will pay out if certain currencies lose value. Either way works just fine it just depends on what kind of investor you are: someone who likes taking risks or someone who wants more security from their investments.
How to Deal With a Bear Market?
The best way to deal with a bear market is to buy low and sell high. The simplest way to do this is by purchasing cryptocurrency at the dips and selling the rallies. You can easily buy cryptocurrency with a credit card. Once you feel that you have made enough profit, you can sell and convert cryptocurrency to fiat and make a profit.
It’s not always easy or possible to catch every dip because many investors can have similar strategies. Still, if you can successfully employ this strategy during a bear market, you should be able to make money while others are losing it.
If you want something slightly more advanced than just buying the dips, then here are some other options:
Buy the dips and hold; sell only when there is an obvious uptrend in progress or after reaching a predefined target price level (this strategy works best with securities that have been around long enough for patterns like these to emerge).
Buy the dips and sell rallies; only invest enough capital so that your gains from selling rallies cover any losses incurred from buying dips (this strategy works best when combined with an investment portfolio approach).
You Can Make Money in Both Bull and Bear Markets!
The fluctuations in the cryptocurrency market are normal and expected, so you shouldn’t be worried when they occur. In a bull market, buy cryptocurrency (buy low, sell high). In a bear market, sell cryptocurrency (sell high, buy low). If you buy cryptocurrency during a bull market and then later decide to sell it during a bear market, then obviously, your profits will not be as large as if you had bought and sold at those times when prices were at their peak but remember that even though these fluctuations may seem inconvenient or risky at first glance – they can provide us with opportunities to make money! All you need to do is wait for the right opportunity.
As we have discussed, there are plenty of opportunities to make money through crypto regardless of the market. That’s why we recommend you listen to your guts and act quickly to take advantage of these fluctuations when they come.
Never forget that you’re doing this for fun and profit – not just because it’s trendy or cool. Stay calm and try not to panic when things get tough in either direction. The most important thing is that you don’t lose sight of your goals; just keep them at the forefront of your mind as you navigate the ups and downs ahead!
The author Dennis P. Reed possesses a vast experience in the IT industry, especially in the domains of website and mobile app development and digital marketing. He writes on topics encompassing the above mentioned domains and is considered a maven in his chosen field – Information Technology.