If you keep yourself updated by watching the cryptocurrency-related news, read headlines as well as social media posts, then you must have come across the terms Bullish and Bearish. The terms are used within any financial markets involving trade, be it the traditional stock market or cryptocurrency market. As you are going through an investment journey, it’s essential to comprehend what these common terms mean and how they will affect you as an investor.
All in all, we use these terms to describe the condition of the current condition of the market. More specifically, when the market is gaining or losing value. These uptrends and downtrends are typically reflective of the emotions of an investor. You will commonly observe a market’s value rise amidst positive news, and fall within sight of negative news. In some cases, different works might be affecting everything to impact a market in unexpected ways, for example, “Pump and Dump” groups who strategically purchase a lot of cash to drive up the costs, and afterwards all sell off for a gain.
Bullish Market – A Quick Overview
A Bullish Market is used to depict a market that is expanding in value. You’ll ordinarily observe this term tossed around when there is a consistent increase in the cost of an asset. This means that the trust in the market is high and investors are feeling idealistic about the condition of the market. You might be a bullish investor if you tend to purchase and hold your assets as long as possible, in the certainty of picking up a profit later on.
How Did The Term Come Into Market?
This term for the Bull Market is originated from 1714, yet there are numerous around precisely where the expression “Bullish Market” originated from. One theory comes from the manner in which a bull attacks an opponent. The bull brings down its head and uses its horns in an upward manner to thrust into a rival. In the market, this is observed when the market is low and begins to climb to push its opponent up in the air. Thus, a bull market leaves the market has been low and then rapidly climbing.
How Can You Identify A Bull Market?
A Bull Market can be recognized by a couple of key factors outside of just watching a predictable upward trend. These elements are not constantly right, but instead are just general guidelines of what you can begin to search to identify the Bullish Market.
General Economics – There are so much confidence and optimism during a bull market. Thus, we generally see a strong demand for an asset with waning supply. Not all investors are eager to sell since confidence is high, and many of them are looking to buy into the market. This results in the steep rise in prices.
Economic Health – Generally, people have more money to spend when the economy is healthy. A Bullish Market can turn out to be a characteristic of economic health since investors have more “play” money to pay on assets.
Human Psychology – Have you ever seen bad news on your favourite currency and the value of taking a dip? This happens due to simple human behaviour as well as psychology. The feelings and thoughts of investors behind a market are a critical driving force between rises and falls. Confidence is high during a bull market, and the investors are optimistic about earning profits.
For long-haul purposes, you can utilise the day candles on your most loved trading platform to take a gander at past trends and seeing where bull markets have happened. You can even discover vital news around the Bullish Market dates to perceive how the market responded to various types of news and can be better prepared to invest when comparable news occurs.
Bearish Market – A Quick Overview
The Bearish Market portrays a market going down in value. Unlike Bullish Market, Bearish Market is when you see a consistent decrease in the price of an asset. Confidence in this market is very low, which steers numerous investors away from the asset.
How Did This Term Come Into Market?
As with the Bullish Market, the term for the Bearish Market originates from 1714. The principal theory for this market terminology comes from how the bear attacks. Envision a bear swiping its enormous paws downwards, slashing a rival. This symbolises the descending pattern we see in the Bearish Market.
How Can You Identify A Bearish Market?
A Bearish Market can be related to similar core factors as a Bullish Market, only with inverse points of interest. You will see that the asset value is in a consistent decline. These below factors are not always precise in deciding a bear market but are sure a good starting point.
General Economics – Supply is high, and demand is low during the Bearish Market. In general, economics, when the supply is higher than demand, the price drops. This signifies that more people want to sell than they want to buy.
Economic Health – The Bearish Market can, at times, be associated with a weak economy. Investors have less money to spend amid uncertain economic times, and a downward trend may result in keeping investors away.
Human Psychology – Undoubtedly, human psychology and emotion drive the market. At times, we find a Bearish Market when market confidence is low due to fear, uncertainty and doubt, which can cause a downtrend. During this time, investors might be moving their money into the assets which are more stable. As the market is unpopular, this can shake the confidence of the investors and cause other investors to stay away from the asset, which results in a price decline in the market.
The Bearish Market can be an incredible time to begin using some trading indicators to check whether an asset might be oversold. This gives the shot for investors to invest into a promising asset at marked down cost potentially.
Taking everything into account, looking at historical patterns can be useful in distinguishing Bullish or Bearish Markets. We hope you enjoyed reading this article about Bullish vs Bearish Markets. Share your view in the comments!