What is a bull or bear market in crypto? When should you invest?

After all, it is impossible to perfectly time the market

What Is A Bull Or Bear Market In Crypto When Should You Invest

Much like the stock market, the cryptocurrency market has its share of highs and lows. But cryptocurrencies are highly volatile and can change in value of 100s or 1000s in a day. These fluctuating periods are called ‘Bull and Bear’. The highs or peaks are referred to as the bull market and the lows and dips are termed as bear market.    

While timing the market and investing can be difficult at any time, it can be particularly difficult during the bull or bear runs.

Let’s dig further to understand how cryptocurrencies and investors react to these market moves.

What Is a Bull Market?

A bull market refers to a strong market uptrend characterized with more buying by investors, high market confidence, positive prices, etc.

Basically, it is a sign that investors and the market is ‘bullish’ about the increasing prices and the believers are called ‘bulls’. 

Generally, a 20% sustained increase in market prices is often considered as the start of the bull market. This is usually preceded by a previous 20% or more decline. Sometimes, investors wrongly interpret short-term downward movements as the end of the bull market but it is important to consider the price fluctuations over longer time frames.    

Investor sentiment during a bull run:

a. Buy rising cryptocurrency early during the climb and sell when they reach their peak

What Is a Bear Market?

The market is considered Bearish when the supply is greater than the demand, prices are falling, market is down 50% or more and the general sentiment in the market is pessimistic.

It is difficult to predict when the market has reached a bottom price as many external factors like FUD, world news, economic crisis, investor sentiments can influence it.

Investor sentiment during a bear market:

a. Sell their holding to avoid losing money

b. Short sell by selling shares and buying them back at a lower price, thereby booking profits.

 

The Crypto Cycle

The cryptocurrency market follows a four-year cycle, caused by the Bitcoin halving, which occurs every four years. BTC enters the bull run as the newly mined BTCs are reduced by 50%, thereby creating a demand due to the reduced supply. As other cryptocurrencies respond to how BTC moves, most of them enter the bull cycle.

The crypto market top position is usually followed by a market correction or market crash of 60%, then the market usually hits bottom of the current cycle in a year. This marks the beginning of the bear market.

Making Calculated Moves

The bear market is usually a right time to increase or diversify your portfolio as it can prove beneficial in the long run. But on the way down, there are a series of bull traps when the prices shoot up in the short term before continuing to fall further. While you can indulge in technical analysis and read charts to know where the crypto project or market is heading, it impossible to perfectly time the market moves.

Right Time to Invest

If you are a regular investor and don’t have a complete know-how of the moves you need to take during the bear or the bull market, do this. Shortlist some projects and invest fixed amounts in them at regular intervals, irrespective of which way the market is headed. This strategy is referred to as Dollar-Cost Averaging and helps in minimizing your risk by building your position over time. This would include investing in projects that you believe in, the ones that have delivered steady returns in the past or in so projects with solid fundamentals.

For instance, iOWN Token has grown by 300% in less than 2 years since the exchange listing and have been soaring steadily in spite of the small dips during the bear market. An ERC-223 utility token, iOWN Token was sold at $0.01 during the private sale and Initial Exchange Offering (IEO) in 2019 and was listed on global crypto exchanges in early 2020. At the time of publishing, the token was positioned at $0.03, all set for an uptrend.

Final Word

To stay invested in the cryptocurrency market for a long term, shortlist projects that you think have a potential to moon and make small investments in them regularly. Don’t let FUD (fear, uncertainty and doubt) takeover you when the market is in the bear phase or get FOMO (Fear of Missing Out) during the bull run.

Share on telegram
Telegram
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook

Leave a comment

Your email address will not be published. Required fields are marked *

Stay informed!

Subscribe to our newsletter & stay updated!