Bear Market
Basic Information
Bear market is a term used to describe a generalized decrease in the price of assets on a market. Usually, the term is used when prices fall 20% or more for an extended period of time.
Riding Out a Bear Market
A Bear market is the opposite of a Bull Run, when assets on a market start increasing their price by 20% or more.
There have been many Bear markets in history, and as of December, 2022, we are in another one. The global economic crisis has caused a decline in the prices of all assets on different markets (cryptocurrencies, stock market, real-estate market, etc.).
PROs
- Allows small investors to buy at a very low price
- In some cases, it shows the real value of assets
CONs
- It does not provide enough reason to invest
Conclusion
In conclusion, a Bear market could be a unique opportunity for investors, especially smaller ones, but they should always be careful and pay attention to other aspects. A low price is not enough reason to buy any asset or cryptocurrency.
Analyst opinion
It is very important to understand that a Bear market is not just a discounted price for investors, because it is not enough reason to invest into any assets. There are many other aspects that should be considered at the same time. In the case of cryptocurrencies, it could be a good idea to invest during a Bear market after enough research, but this is absolutely necessary to determine if the currency:
- Has had a stable price for a while
- Is used as payment method and as a store of value
Currently, as of December, 2022, the Bear market has been caused by a major economic crisis, which has been largely caused by interest rate rises. In these kinds of economic crises, it is more expensive to borrow money, and speculators that usually do so to buy and sell crypto not only stop, but they also start selling all the currency they hold in order to pay off debts.
As a consequence, Bear markets tend to reveal the true value of assets as determined by holders and users of a currency, instead of the value after inflation by speculators, who buy and sell for the sole purpose of profit.
Analyst
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