To those new to crypto and trading, bears and bulls might just represent two mammals that you wouldn’t want to end up on the wrong side of. But in the world of Bitcoin and blockchain, bears and bulls mean something completely different. Instead, these are the terms given to describe the state of the market. But how did bears and bulls end up in crypto, and where did they come from?
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Why do we say bear and bull market?
Firstly, the terms ‘bull market’ and ‘bear market’ aren’t exclusive to crypto. You’ll also hear them mentioned when talking about other markets such as the stock market, the housing market or any other market from the TradFi (traditional finance) world.
The origins of the terms are pretty unclear and there are a few different answers out there on the web. One of the more popular explanations has to do with how each animal carries out an attack. Bulls attack upwards with their horns, while bears swipe downwards with their paws.
Other explanations relate the terms back to bear skin salespeople of the 1500s. Others talk about how bears and bulls used to be pitted against each other in California bloodsports.
What is a crypto bear market?
A crypto bear market can be defined as a period of time where people selling cryptocurrencies or crypto assets outweigh the amount of people buying them.
While any period can be described as a bear market, in the crypto world, bear markets generally last for around 2 years.
What is a crypto bull market?
A crypto bull market is, not surprisingly, the opposite of a bear market, when prices of crypto tokens are generally on the up. This is caused when the amount of ‘buyers’ is higher than the amount of ‘sellers’.
You might also hear traders or investors referring to themselves as “being bullish” on certain projects. This simply means they’re optimistic and expect the popularity of the project to rise in the future.
A bull market may sound like the best time to invest as prices are on the up. As any experienced trader will tell you, at some point in a bull market, prices and sentiment will be at their highest. Investing when a currency is at its peak can lead to, what’s known as being left holding the bag.
Are we in a bear market or a bull market?
Most would say the crypto market flipped from bear to bull at some point early in 2024. The period we are in now (June 2024) would be considered by most to be the start of a crypto bull market or bull run.
Generally speaking, crypto markets are linked to more traditional financial markets and sentiment in traditional finance is often mirrored in the emerging world of decentralised finance. The current crypto bull market could’ve been a knock-on effect from the bullish sentiment around the traditional stock market. Other factors that could’ve caused the recent bull market include positive news stories, the impact of the Bitcoin halving and new use cases for blockchain technology.
Another strong sign of a crypto bull market, which is true at the moment, is when new people interact with cryptocurrencies and crypto-based projects for the first time. If you’re part of this group that is new to crypto, it’s important to know crypto scams are more popular in a bull market as scammers look to prey on vulnerable, lesser-educated investors.
This is important to know as the anonymous nature of the crypto world makes fraud more difficult to track. If you have been targeted by a crypto scam, be aware that specialised crypto recovery experts, such as WRS, exist to help recover lost funds.