What are Bear Markets?

What are Bear Markets?

What essentially are Bear Markets?



Like the bull market, the term bear market refers to a state of an asset market.



Bearish markets are used in reference to financial markets with the potential of being in a downtrend motion. Investors are able to analyze that the asset’s value would decrease gradually in accordance  as well. This incidence may occur from the result of negative news or the decline of the economy at certain points that may have led to investors deciding to sell assets to receive their profits or maybe even cut their losses, leading to a bear market.

With the crypto market being highly volatile, bearish markets can lead to price depreciation of up to 85%.





The Term’s Origin



The term derives from the downward motion when a bear attacks using its paw, which later became the referenced action behind the phrase “Bear markets.”





Behavior during Bear markets



In bearish markets, the price of assets, especially crypto coins, tend to decrease significantly, meaning that investing in the market would be notably risky, plausibly resulting in loss of capital in the upcoming periods of time.



The most important factor to take into account is that investors should be strategic when investing. Also risk management is crucial, especially in such markets where prices can be highly volatile, fluctuating at rates that can be surprisingly risky.





Reference:

Investopedia, Binance Academy

Trading

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