What are “bulls” and “bears” in trading?
Where did the terms “bulls” and “bears” come from and what do they mean?
The crypto world seems to be an animal-friendly environment. We can observe the whole sophisticated ecosystem here — from a vast variety of dogs and pandas to owls and ravens.
But there are two main animals we should get familiar with before we start diving into crypto in order to make some profit. The terms “bulls” and “bears” as well as “bullish” and “bearish” came to the crypto world from the stock market without losing any meaning and will be explained in this article.
There are many theories regarding the history of these terms and how they made their way to being accepted worldwide as trading terms.
The most popular one leads to the attack styles of these astonishing animals.
Bears often attack out of fear, they tend to slap their opponents and bring them down. Therefore when investors are lacking confidence and start selling assets, triggering a market declining trend, the market is called “bearish” and traders who sell expecting the market to drop are “bears”.
On the contrary, bulls tend to attack when they are full of self-confidence, they charge and use their horns to lift their prey/victim.
Traders who are “bullish” are acting out of conviction that the market will grow, they are buying assets hoping to make money later.
Although there is no formal definition of a bull market, it is common to say that the bull market starts when the prices rise at least 20%.
The same can be said about a bear market. We usually refer to a market as a bear market when prices drop more than 20%.
Not all traders would agree with this definition though. Bull and Bear markets can also be considered more as a tendency or a trend you can follow and they start from the moment the trend kicks off, not after some particular time or any particular percentage of the price change.
“Bitcoin is in a bear market not because it has fallen 20% and more, it is because the trend appears to be downwards and has been since November.” said Clem Chambers in his article for Forbes december 2021, following his words with this easy to understand diagram:
It is worth mentioning that both market tendencies can work in your favor if you are doing the right thing at the right time. A bear market can be the perfect chance to buy, and an overdone bull hype can be a dangerous time to join the game.
It is essential to recognize market tendencies and it’s even more important to be able to anticipate potential market moves by deducing them from the various sources of information, including news and events or by using technical indicators which you can read more about in our next article.
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Cryptocurrency is one of the most dynamic industries and those who are ready to educate themselves have a lot of opportunities. It doesn’t matter if you are a bull or a bear — be smart, avoid panic selling and double check any financial advice you get. Happy trading!
The original article is here: https://www.nicex.com/blog/post/what-are-bulls-and-bears-in-trading