What is a Bull Market in Cryptocurrency?
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Markets go up, markets go down – sometimes they even go sideways. But what has that got to do with animals? 🐻🐂😕
What is a Bull Market?
A bull market refers to a financial market where price is strongly trending upwards. In a bull market selling largely outweighs buying and demand is greater than supply.
"Bull market" is a phrase that originates from the stock market, but is applied to all kinds of financial markets.
In bull markets prices do not exclusively increase. In fact, there are often large drops in price that catch out people out. As long as the long-term trend remains positive the bull market is maintained.
It can often be hard to identify a bull market as it’s happening. They are easier labelled after the fact.
Trading with the trend is often advised, but you still have to be very careful. Long term up trends can still be maintained while crushing price drops play out in the short term.
Here’s an example of a bull market.
If you zoom in you can see the big drops that are part of the trend. The price fell almost 1,000 USD.
In a bull market investors are optimistic. Traders carefully and methodically assess and predict market movements to profit off the upward movement and avoid the drops.
For new traders, bull markets aren’t the instant money making exercise they appear to be.
In Cryptocurrency, What is a Bull Market?
Bull markets in cryptocurrency are just like they are in traditional financial markets. However, the percentage changes are usually different. Historically, cryptocurrency has returned huge gains in a bull market.
In 2017/2018 and the last cryptocurrency bull market, the price of Bitcoin shot to 20,000 USD and the total crypto market cap hit 830 billion USD.
Here’s what the last cryptocurrency bull market looked like:
This was followed by a long bear market, which is, as you might expect, the opposite of a bull market.
If you are bullish, you are feeling optimistic about the future price of an asset. You think it will increase in the near future.
For example, if you are bullish on Bitcoin, you believe that Bitcoin is going to increase in value.
Joining in the Fun
Now you know the answer to "What is a bull market?" - and you can even apply it to cryptocurrency.
If you are looking to enter a bull market, be prepared when you do so. Here are a few tips, with links to articles that will help you find your way.
- Learn to research your investments
- Build your trading knowledge to nail entries and exits
- Start conducting fundamental analysis
- Manage your risk effectively
- Use an exchange you can trust
Photo credit: Jenny Downing/Flickr