An Overview of Bull and Bear Markets

The words "bull" and "bear" are commonly used in an investment world and it is used in describing the market conditions. I believe all forex traders and cryptocurrency traders must have been hearing about it. The bull and bear market are terms used in describing how the cryptomarkets are doing in general. The bull and bear market tells us either the market is appreciating or the market is depreciating in value.

Bull Market

Bull market refers to a market that is on the rise. It is represented by a succour increase in price. Simply put, the bull market is a market when the value of the commodities or digital assets are on the rise. It is a period when the market economy sounds good. It is a period when the market value uptrend. In the crypto industry, every holder of a particular coin or token is in joy moment during the bull market. It is an era when an asset worth $1 moves to $2, from $2 to $3, and the uptrend continues on and on.

During the bull market, people make profits especially if you are holding a coin when the value is low. All investment has the tendency to yield positive and profits return during the bull market.

Bear Market

Bear market occurs when the value of a crypto market is on the fall. It is when the value of the market is retarding downward. It is also a period when the value of the commodity is declining and the market economy is sounding bad. During the bear market, the value of the market will keep declining and falling from its high price. The prices will continuously dropping down, and the value will be moving towards a downward trend. The bear market is a panicking era for investors, many people do lose hope during this market period.

In general, the economy usually slow down in this era, many do lose interest and some do lose their job due to the bad state of the economy during the bear market. It is very dangerous and risky to make an investment during the bear market except if you are up with an idea of holding for a long term.

HERE IS HOW TO IDENTIFY BULL AND BEAR MARKET

There are some factors and characteristics which we must put into consideration while talking of the bull and bear market. Some of them are:

The Supply and Demand of An Asset.

The volume of the buy and sell order of an asset is a considerable factor in determining if the market will be bearish or bullish. In a bull market, what we do see is "low supply and higher demand", while in the bear market, we do see bulky supply with lower demand. With this knowledge, you can predict the direction of the market if you know the supply and demand of the asset (cryptocurrency). Once there are numerous investors that are willing to buy and few of the holders are willing to sell, then know the market is heading to the bullish direction. Once there is lower supply and higher demand, the price will surely rise because the investors will be competing on whom to obtain the few available supplies. While on the other side, once there are many holders that are willing to sell and few are willing to buy, just know we are heading to bear market. In a situation where there are numerous people willing to sell and few are willing to buy, the price will significantly drop. The demand and the supplies I am talking about here is all about the buy and sell order which can be viewed on the order book of an asset on the cryptocurrency exchange.

Psychology

The investors or traders psychology is an important factor that determines the direction of either we are entering the bull or the bear market. When talking of psychology here, I am referring to the investor's emotions and sentiment towards a certain asset (cryptocurrency) at a particular point in time. The investor's psychology really has great impacts on the behavior of the market. The individual perceives towards the market will determine the direction of the market. Take for example, if the investors gain confidence towards a coin, the market will rise, but if they suddenly lose confidence and pull back from the market, the price will fall.

So for a bull market, you will perceive the investor's willingness to buy or invest in a particular coin. Within your vicinity, you will see people talking about their interest in investing with a hope of gaining profit. Under this scenario, expect a bull market. On the other side, "bear market", the investor loose confidence and maybe have negative mindset towards the market and they will start pulling out their investment and next you see is the price going down. Generally, when the outflow keeps increasing, the market price will start declining. This scenario leads us to bear market.

Change in Economic Activity

Every cryptocurrency out there was built on a certain economy. The economy is what gives weight to the value of the coin. The cryptocurrency and its economy are strongly links together. The economy activity is much like the driver that drives the value of the cryptocurrency.

How do the economy activity create an impact in the bull or bear market?

In a bear market, the cryptocurrency's economy is weak. Take for example; let me say Mr Amos has a business where consumers can utilize CET, and all of the sudden, his business could no longer yield profits maybe because the consumers are not patronizing him enough. The moment his business and profits start declining, it will directly and indirectly affect the market value of the CET. The CET market will experience a total downfall especially if Mr Amos threatened to close his business. Remember this is just an example, such economy activity will cause a beer market in the CET market.

While in a bull market, the opposite occurs. Bull markets occur once we have strong economy activity. Signing a partnership deal alone to boost the economy of a project that causes an increase in the value of a particular cryptocurrency. Any project that strengthened her economy is building a bull market path for its cryptocurrency.

Weighing the Market Changes

The key factor of whether the market is bull or bear is not just consider something carefully, at times, it depends on how the coin has been performing for over a long term. Some do judge the market based on short term trends, but I want to let you know that ideology is wrong. Its long term performances or behavior will determine if you will sight bear or bull market. The short term is only considered for market corrections, but its long term performances will determine whether we are heading to bull or bear market.

MY ADVICE AND WHAT YOU SHOULD DO AT EACH MARKET

For Bull Market

Learn to take the advantage by selling your cryptocurrency during the bull market. Though this is only applicable to those that buy earlier. During the bull market, it is not advisable to buy. Buying a coin at its peak price (ATH) is not encouraging. The bull market era is the best time for short term traders to optimize because their chance of losing is rare. There is always a probability of making a good return during the bull market.

For bear Market

This is the time to buy and accumulate more coins for a long term. This is not a good time for short term traders because there are numerous chances of losing your investment during the bear market. Though we might not know the bottom line of the bear market, so you might still lose your investment during the bear market, but holding for a long term will help you make profits especially when it moves to a bull market.

In Conclusion

It is very essential to know what the market is doing before making any investment. The impacts of both bear and bull markets should not be underemphasized, they are paramount conditions that will influence your investments.

In Addition,

If you are able to identify the market and you already know what to do, but make a wrong choice of platform where to do the trading, you might still not make profits. Making a right choice of cryptocurrency exchange is very paramount. When you trade in a good exchange, you will enjoy some features which will make your investment profitable.

In my research, I discovered that CoinEx is simply the best exchange for trading of cryptocurrency. It is very easy and friendly to use, coupled with other features which you will like.

About CoinEx

CoinEx is a Chinese-based cryptocurrency exchange CoinEx which was launched sometime in 2017. CoinEx exchange has a wide range of cryptocurrency assets i.e about 350 markets. It also supports more than 100 countries and regions.

CoinEx exchange is one of the most simple-to-use trading platforms, the novices or beginners can make their way around the exchange without needing any help. CoinEx is loaded with ground-breaking features which make them outstanding among their counterparts.

Some Other Benefits of CoinEx Exchange are:

Low Fees On Transactions

CoinEx exchange charges the lowest fee in the industry. It is low as 0.01% for the market taker.

Highly Secured Platform

CoinEx incooperated a top notch security system, coupled with various protocols in securing different aspects of the platform.

Simple To Use

The platform has a good user interface, the chart on the exchange makes it easier for users to analyze market directions. Users can as well navigate through various pairs with simple clicks.

Free Money

CoinEx exchange offers referral rewards to users who refer and invite others to trade on their exchange. You can earn up to 40% commission.

There are still many other features of Coinex, but I will pulse here.

Written by Raphman!
CoinEx Ambassador