As a noun, bear can refer to a person who believes that market prices, especially of stocks, will decline. As a noun, bull can refer to a person who believes that market prices, especially of stocks, will increase. When the market is in the Run-Up phase, it is called a bull market, while in the Run-Down phase it is a bear market. If you’re unsure of how to rebalance your portfolio appropriately to match your timeline and willingness to take on financial risk, check out our guide to retirement savings here. You may also want to consult with a financial advisor to make sure you have the right diversification and investment mix.

• Instead of referring specifically to short sale traders investors began referring to anyone who expected price dips as bearish, and declining prices as a bear market.
• This isn’t a short-term dip like during a correction when there are price declines of 10% to 20%.
• Once you reach the bottom of the market and price cycle, you start again from the accumulation.
• Warning signs that a bear market might be coming shouldn’t lead you to change your investment strategy.
• Accompanying a bull market are several things, to mention a few; bull markets generally happen when the economy is strengthening or strong.
• Most experts agree that a bear market is one in which securities prices have fallen 20% from recent highs, if not more, spawning widespread pessimism from investors.

When they see a shrinking economy, investors expect corporate profits to decline in the near future. A bear market can signal more unemployment and tougher economic times ahead. Although bull and bear markets are driven by the expectations of market participants on where the economy is headed, it is tremendously difficult to pinpoint the top or the bottom of a market. Despite this uncertainty, there is one thing most traders believe — markets are cyclical.

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It might be said that the prevailing sentiment of participants in a bull market is greed or fear of missing out. What goes up must eventually come down, so it stands to reason the two most memorable crypto bear runs immediately followed the biggest bull runs in crypto market history. During the bull run of 2020 and 2021, major crypto assets Bitcoin and Ethereum hit all-time highs of $69,000 and $4,880, respectively. In a bull market, we tend to see a significant increase in innovation and adoption of new technologies, as well as a positive regulatory environment that helps boost confidence in the space. “Regardless of cyclical swings, historical experience shows the best time to invest is consistently,” says Michael Weisz, president and founder of Yieldstreet, an alternative investment platform. You can invest in specific sectors through index funds or exchange-traded funds, which track a market benchmark.

Etymologists disagree on the exact origin of this term, however, it most likely has its origins as a foil to the term bear. While other theories circulate, this is the most generally accepted Bull and Bear Market: Definition & Difference source of the phrase bull market. During a crypto bull run, corks are popping, Lambos are being bought left and right and we’re all strapped on a rocketship headed straight for the moon.

Why is it called a bear market?

A bullish market represents rising stock prices, as it symbolically charges ahead with confidence. Conversely, a bearish market represents declining stock prices, as it symbolically retreats down into hibernation. Understanding the contrast between bull vs. bear markets can help you feel more confident as an investor, especially when the stock market seems to be headed for a market downturn. In short, a bear market is when stock prices fall and a bull market is when prices go up.

There will likely be strong GDP growth, and companies’ financial performance will be on the rise along with other better economic data. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of https://www.bigshotrading.info/blog/investing-in-mutual-funds-how-they-work-and-how-to-make-money-from-them/ future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market.

Whether we’re in a bull or bear market could influence how your stocks perform in the short term. But what about the long term?

Traders should also follow different technical indicators during bullish and bearish markets. Some of the indicators include moving averages, the bullish and bearish percentage index, and the volatility index (VIX). It is possible to profit in both a bull and bear market but it requires different trading strategies. More specifically, the terms “bullish” and “bearish” describe the state of a market in relation to its current direction. Specifically, if it is gaining value, or moving up (uptrend), or losing value because its movement is going down or declining in value (downtrend).

It may not be the case with cryptocurrency since crypto investors give feedback that affects crypto differently as compared to stocks. During economic upswings or downturns, investors respond by holding on tight to their investments or selling them as quickly as possible, depending on which strategy they deem will yield them better returns. A financial market which is characterised by a consistent fall in the prices of securities is called a bear market. In this market, pessimism is prevalent, and the investors take a short position, i.e. due to the anticipation of loss by holding them, securities are sold by the investors. In the bear market, stock trading declines, returns are low, investor confidence is low, and often accompanied by the recession in the economy. Understanding that a bull market signals rising stock prices and a strong economy, while a bear market signals falling stock prices and possibly a weak economy is crucial to any type of investor.