What Makes a Bull and Bear Crypto Market? - An Explanation for Filipinos
If you’ve traded crypto, you may have come across these terms: "bull market" and "bear market." So how are bulls and bears related to cryptocurrency? In this article, we’ll help explain the differences between a bear and a bull market, and how you can distinguish the two.
Crypto in the Philippines
According to statistics, the Philippines has become one of the fastest cryptocurrency adopters in the world. Data has shown that the pandemic helped fuel this trend, causing a significant uptick in Filipinos investing in crypto.
The Philippines has also worked on improving its technology and is now on par with Nigeria and Vietnam.
From the Bangko Sentral ng Pilipinas (BSP) consensus reports, ATM, BTC, crypto gaming rewards, and their integration with rural banking appeared to be 'reliable early indicators' for the Philippines to become the third-fastest growing sector in the world.
The BSP believes crypto can bring significant impact to the Philippines’ future for a number of reasons, including the country’s regulatory framework, market participants, and growing ecosystem of crypto-friendly players. In fact, the Philippine Stock Exchange is now interested in offering crypto assets. Keep reading to learn more about the Bear and Bull market.
The Bear Market
The market can turn "bearish" whenever the market experiences a substantial downtrend over a relatively short period of time. In short, prices typically drop rapidly during a bear market.
The market is sometimes classified as a "bear market" whenever it experiences a dip of 20% or more over sixty days. The figure 20% is arbitrary at most, and trends may not be evident sometimes. According to analysts, recognizing less-obvious bearish patterns require a specific set of knowledge and tools. Bear markets typically form when an economy’s productivity is weakening because of low business profits, employment, and disposable income.
The Bull Market
Unlike bear markets, bull markets feature upward trends over a short period of time. Oftentimes, these markets are characterized by the investors' optimism as they expect the prices to increase. Investors are typically overconfident in bull markets and expect to get reliable results over an extended period of time, despite how hard it is to consistently predict market trends.
Bear and Bull Markets in Cryptocurrency
These two terms originated from traditional markets like the Stock Exchange, but they’ve made their way into the world of crypto. However, since the cryptocurrency market is smaller and more volatile, it’s more common to see an extended bull or bear crypto market.
The Origin of These Terms
These terms have meanings that are simple enough for anyone to understand. Bullish means upward trend, while bearish means downward trend. You may be wondering why it’s named this way. Both the animals represent great power, and so why are they used to distinguish between upward and downward. There are two answers to this question, one historical and one biological.
In the olden times, the merchants that were selling bearskins had middlemen who would work on speculating these skins' future prices in hopes that the trappers would have them sold at a minimal cost. The middlemen were eventually known as "bears." The term stuck whenever the market experienced a downturn since the “bears” were rooting for the price to go down.
The bull term originates from a popular blood sport that pitted bulls against bears. The second explanation attributes bulls to their upward horn thrust and bears to their downward paw strike.
How Can You Take Advantage of Bear and Bull Markets?
Both markets, even bear markets, provide opportunities to generate profit. In a bull market, the obvious method is to take advantage of increasing prices before they reach their peak. No one has a definitive answer for when the market is at its peak, but you’ll minimize any losses with a proper risk management system. When the market is appearing more volatile than usual, and you sense a bearish trend, it's wise to reduce your positions, especially if you hold unproven cryptocurrencies. People typically move their assets into precious metals or cash in these situations. With these kinds of support, you can hold your ground against a crash that can place you in an excellent position for any bear market that would eventually come. When the bull market ends, there would be many quality cryptocurrencies that you can purchase at a much lower price.
Take advantage of a bear market is much more complicated in comparison. Investors will typically use a strategy called short-selling, where they’ll sell borrowed shares and hope to repurchase them at a lower price. These types of trades are dangerous, and we only recommend it to experienced traders.
Bear VS. Bull Market
Like what we mentioned before, there may be so many opportunities for making money in both types of markets. Because of that, avoid taking out too much on the bear. It would be critical to take note that the strategies may be significantly different for every market. You need to know the kind of market you are in to know which trading strategy would be best to implement.
Similar to any kind of investment, risks will always be involved whenever you invest in cryptocurrency. Lessen these risks by ensuring that you study it and avoid investing money you wouldn't want to lose. Cryptocurrencies are digital assets that are in the stages of infancy but are maturing over time. Because of their incredible volatility and needed investment, these are not recommended for those who are faint of heart.
Knowledge can genuinely be power in this arena. Watch the videos, join any forum, and read our blogs, as these can help you get the hang of things and help you enjoy the ride! Always make sure that you do the best research, so you can lessen every potential risk.
Kick-start Your Crypto Journey With Binance!
If you’re looking for a simple method to buy or sell crypto with zero fees, you can use Binance P2P, the peer-to-peer trading platform that is available in the Philippines. We also provide crypto trading products like Margin Trading, Lending, Binance Futures, and Spot Trading. If you’re more of a passive investor, you can put your crypto assets to work using products like Binance Pool and Binance Earn.