Crypto Payments, Educational, Trading

Bull vs. Bear Market: What’s the Difference?

Last updated: June 5, 2023 13 min read

Vilius Barbaravičius

Bull vs bear market

While many may not understand how these terms are being used in different markets, they are still a very important part of the financial markets trading system. If you want to excel in your trading investments and be seen as someone who has a good understanding of the market, getting familiar with the bull and bear market terms is a must.

Importance of understanding investment terms

The stock and cryptocurrency markets are sometimes tricky and volatile. When it comes to making investments, adequate research and a well-judged, diversified portfolio might be just what you need to maximize returns and payoff.

Bull and bear market: difference in crypto and stocks

Bear and bull markets – general explanation

What is a bull market?

Bull market: what is it?

What is a bull market in crypto?

How long does a bull market last?

Bull markets trend in the stock market typically lasts from a few months to a few years. It is known to last much longer than the bear market. The bull market ensures growth, and it is a more frequent occurrence, with an average of 78% for 91 years. Due to its long years of the occurrence, it gives investors adequate time to make their investments and fixed income securities. Also, get good profits before it finally drops again.

Characteristics of a bull market

Characteristics of a crypto bull market

What is a bear market?

Bear market: what is it?

What is a cryptocurrency bear market?

The crypto market shows higher dips in prices during a bearish period than the stock market. A perfect example of a crypto bear market could be a Bitcoin crash in 2017 when the BTC price fell from $20K to $3K in a couple of days.

Characteristics of a bear market

What is the difference between bull and bear markets?

The Bull and bear markets in crypto and stocks are marked mainly by the price movement downwards or upwards. Also, when a bull or a bear market pattern appears, crypto markets tend to move quicker than stocks. It is worth noting that cryptocurrencies’ volatility and broader daily price movements make it harder to spot bull or bear markets in crypto.

However, let’s explore the main differences between these terms below.

  1. The bull market occurs when the stock or crypto market trend is optimistic and has a high rate of investment returns, while the bear market occurs when there is a negative impact or decline in the trend of the market.
  2. During the bull market, investors experience confidence, and a rise in investment security can be seen widely. In stocks, investors expect positive future results and opportunities. With digital currencies, positive outcomes might not be the case if you buy coins at the top. 
  3. The bearish market makes investments difficult because of its poor returns. However, buying the dip is a popular move when investing in cryptocurrencies.
  4. Bear markets affect the economy negatively at a faster rate, while the bull run market recovers, which allows the economy to grow positively in the long term.
  5. There is usually a high rise in income and employment rates during a bullish market trend. The opposite happens in a bear market – there is an increase in layoffs and a drop in income rates. However, those who rely on their income mainly on cryptocurrency gains might show a higher interest in regular workplaces during the crypto bear market. Investors can have a more laid-back mindset during the bull runs in crypto.
  6. There is usually more money liquidation during a bull market as investors fund various try activities to ensure consistent money flow. These financial decisions can vary from stocks to gold, real estate, etc. During the bear market, some restraints cause investors to exercise great caution and risk tolerance in their investments, hence making money in circulation limited.
  7. The bullish market ensures that banks and other financial institutions impose very low-interest rates on loans, allowing businesses to thrive more as they can take out loans and pay them back without problems. The bear market limits the funds given out in loans by banks, and the interest rates are usually higher and difficult to pay back.
  8. Many international investors would want to make investments in the market because of the good economy in the bull market. The reverse is in the bear market, as foreign investors usually withdraw from making any investments for fear of recording losses.

Investing in bull and bear markets

Bull and bear markets: investing in crypto

However, with Bitcoin, it’s the opposite – you accumulate in the bear market using your fixed-income assets and spend or increase your fiat holdings when taking profits in bull markets.

To avoid being trapped in a financial mess when the market swings hit, it is better to seek advice from investors and financial advisers who can put you through making solid decisions to limit any potential losses.

Sometimes, especially new investors, may not fully grasp the idea of the bull and bear markets. They end up making financial mistakes that could have been avoided with the help of a good advisor.

Is it better to buy in a bull or bear market?

However, with a good financial advisor, you can decide to buy stocks in the bear market period as you may get them at very low prices while you prepare for the bull market period to sell at higher prices for greater returns.

Buying the dip

Why is it called the bull and bear market?

In reality, there is no clear contrast between how the terms “bull” and “bear” were coined, but the animals are used because of their mode of behavior and how they approach their opponents. Hence, a bull is said to be able to trust its horns, thus why it is used to denote the market’s upward trend. A bear thrusts its horns downwards, as the market trend shows when it has hit a bear period.

Also, the bull and bear terms may be used to explain market trends because of the historical fights between bull and bear, which were organized as a means of entertainment in the past. 

Many things influence the bull and bear market appearance in crypto markets. The cryptocurrency market is smaller, younger, and more volatile than the stock market. Thus there are certain differences in trading during bull runs and bearish markets.

Getting adequate knowledge about the market trends, their key takeaways, and carefully planning out your investments together with the market direction would ensure you achieve success most of the time.

Disclaimer: The information contained in this message and any information liked through the items contained here is not intended to provide sufficient information to form the basis for an investment decision. The information presented here was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before purchasing or selling any such instruments.

Written by:

Vilius Barbaravičius

Vilius is a seasoned copywriter and bitcoin enthusiast specializing in blockchain and cryptocurrency topics. He's been with CoinGate since 2018, writing blogs, social media content, sales materials, newsletters, FAQs, and more. He's relentless in pursuing knowledge and a better understanding of the crypto industry, which helps him create meaningful and engaging content every day.