Owing to the highly volatile nature of the crypto market, there are times when the market direction will be on the rise and when market prices will crash. These infinite cycles of rising and falling are known as market trends.
Traders, however, have come up with terms to identify these cycles. These terms are ‘bull’ and ‘bear’ markets.
Bear Vs Bull
They call it a bull market when market prices are on the rise (or are bullish), and they call it a bear market when market prices start to fall (or are bearish).
As a fun fact, nobody knows the origin of these terms. But the names bull and bear market are thought to have been derived from how these individual animals attack their opponents.
Both of these animals are known for their incredible strength, so it is only fitting that while a bull thrusts upwards with its horns (bullish or rising), a bear will often swipe down with its paw (bearish or falling).
This, of course, is one out of many explanations as to the origins of the ‘bull and bear.’
What Are Bull Markets?
Bullish conditions in any market (not just the crypto market) are conditions in which prices are rising.
Initially, the term ‘bull market’ was only used in relation to the stock market. A bull market in stocks refers to when stock prices rise by 20% after two declines of 20% each.
Following the invention and subsequent popularity of cryptocurrencies, however, ‘bull market’ is now used to refer to favorable market conditions in which the price of a cryptocurrency rises relative to fiat currencies, stablecoins, and even other cryptocurrencies.
In the crypto market, there is no specific way to determine when a market is bullish or not. Bullish conditions are determined and therefore identified by metrics such as optimism, the fear and greed index, as well as investor confidence.
What Are Bear Markets?
The opposite of a bull market is a bear market. The term ‘bear market’ refers to market conditions in which the prices of a cryptocurrency begin to fall relative to fiat currencies, other cryptocurrencies, and other types of commodities.
As with a bull market, there is no established metric to determine whether a market is officially bearish.
How To Take Advantage Of a Bull or Bear Market
There are many ways to take full advantage of bull markets
HODL is an acronym for ‘hold on for dear life. It is a term commonly used t refer to when investors hold on to their crypto assets and refuse to sell, regardless of the current market conditions.
Fun fact: HODL was originally a spelling mistake by a bitcointalk forum user. The term HODL later became adopted and retrofitted to mean what it currently does.
In this strategy, investors take advantage of small dips within bull markets. These investors take the opportunity to add to their holdings when the market performs short-term corrections. They can then choose to sell their holdings at the top of the trend or keep HODLing.
Full Swing Trading
In full swing trading, a trader takes a very active role while the market continues up or down in its trend. By full swing trading, a trader rides the trend, setting buy limits and sell stops in an attempt to force out small and sometimes huge gains.
This strategy can be risky in a highly volatile setup such as the crypto market and should be carefully undertaken.