The Animal World: “Bulls” And “Bears” On the Crypto Market
Experienced crypto traders are well acquainted with the concept of “bullish trend” and “bearish trend”, but for beginners this terminology may sound a bit weird. In fact, investors have been familiar with “bulls” and “bears” for quite a while — since the emergence of assets on the US market. From traditional trading, these terms have migrated to the Crypto World, because the main principles of markets’ functionality are the same there.
Simply put, “bulls” means buyers, and “bears” are sellers. Why these animals? Because of the way they capture their prey. The bull raises it on the horns, directing the action upwards, and the bear, on the contrary, hits a victim with its paws to the ground, which is a downward movement. A “bullish trend” is called an increase in prices on the cryptocurrency market. It’s a situation when the number of buyers exceeds the number of sellers. “Bearish trend” is quite the opposite. When the number of sellers on the market is bigger than the number of buyers the assets’ price will fall down.
You can find out more about the difference between bullish and bearish markets in this article.
Bearish trend: how to use it?
When the price chart keeps going down and stocks or crypto become cheaper, most traders are doing one thing — they quickly sell assets in order to make a profit. Bearish trend is considered to be the best time to invest in cryptocurrencies, as it is the most profitable way to diversify your portfolio. While token prices are falling and market risks are rising, handy traders are expanding their investments.
This trend is acknowledged by the traders as the best time to accumulate capital. Investors believe that if during the period of the bearish crypto market you spend time observing and analyzing the state of your own crypto assets, then there’ll be a high probability of making a profit on the bullish market afterwards.
Bullish trend: how to use it?
Bullish trend means that prices on the assets are going up. Bullish trend is considered to be the best time to sell your investments at their highest price. The market is considered to be bullish when it’s up to 20%. Will we witness this trend in 2022? Well, in the spring, Lark Davis, a major New Zealand crypto trader and crypto enthusiast, published on his Twitter several factors regarding the bullish market. According to that post there is a possibility of a bullish trend on the crypto market before the end of the year. But for now bears still dominate the market.
Bullish trend: will we see it in 2022?
Based on Davis’ predictions and last bull run stats, we came up with 5 major harbingers of a new bull run:
1. New crypto investors appeared because of the Bitcoin ETFs
According to Davis’s forecasts, the new asset on the crypto market will be the main reason for token prices to grow. This new thing is called an ETF (exchange-traded fund) based on BTC. The new financial technology allows you to fix the BTC price with the help of futures contracts which will save it from changes in market sentiment. Such a stable system should attract new crypto investors, which in turn can quickly raise the crypto prices. “Investors need the Bitcoin ETF and it will be a big price catalyst,” Davis tweeted.
2. Growing interest in NFTs
The technology of non-fungible tokens, frankly, has turned the world of the digital economy upside down. Finally, users have the opportunity to regulate digital property relations. From now on, any NFT-based web products will belong to one owner (buyer) and it will be stored only in his wallet, and not on a common server or in the database of the seller company. Don’t forget that NFTs successfully hit the market — crypto investors were so interested in them that last year their action regarding NFTs kick-started a bullish trend. Crypto experts recommend following the news in the NFT sector, so we’ll be able to quickly respond to the slightest changes in trends.
3. Transition from Ethereum to Ethereum 2.0
Ethereum is the second most popular token after Bitcoin. According to Davis, it still holds the status of the “king of smart contracts”: at the end of 2021, the ETH dominance is about 16%.
Crypto enthusiasts predict a bullish trend on the market after Etherium Merge. It allowed users to conduct more transactions which increased the crypto turnover. ETH has changed the Proof-of-Work algorithm to a more convenient Proof-of-Stake and decided to use sharding technologies (dividing the blockchain into autonomous blocks — shards).
4. Increasing diversification on the crypto market
The rise in the number of altcoins is a good sign for crypto investors. This indicates the growth of the industry and surging interest for cryptocurrency. In addition to the obvious market leaders — Bitcoin and Ethereum — such cryptos as Polkadot (DOT), Cardano (ADA), Avalanche (AVAX), Polygon (MATIC) and Solana (SOL) are now working on the outcome of the scaling problem.
5. Major crypto influencers
Crypto traders follow not only the latest data from crypto exchanges, but also the comments of the so-called heads of the Crypto World, such as John McCaffee, Mike Novogratz, Charlie Lee, Roger Ver. Often, the statements from these guys regarding Bitcoin or any altcoin indicate the coming of a bullish trend.
The year of 2022 began with a bearish trend, and continued with a crypto winter. Miners were left without their usual profit, and investors froze in anticipation of changes. Despite the low price of tokens, this period of “calm” provides an opportunity to prepare the ground for the upcoming events in the Crypto World. Will the BTC price soon grow? Find out in this article.
Bullish and bearish trends can be tricky sometimes, in order to be prepared for surprises read our article about market traps.
Don’t forget that the easiest way to buy or exchange coins is to use SimpleSwap services.
SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.