Where do we get these words from?
One historical belief is that the terms "bear" and "bull" markets are thought to derive from the way in which each animal attacks its opponents. A bull will usually thrust its horns up into it's opponent, whereas a bear will swipe it's paws down onto it's opponent. These actions were overlaid metaphorically to the movement of a trading market. If the market performance was up it was said to be a bull market. If the market performance was down it was said to be a bear market.
So, in essence, a bull market is one where the market trend is up and a bear market is one where the market trend is down.
Yes, but what does that mean to me?
The answer is that it all depends on your investment strategy.
The market swings between Bear and Bull. Bear markets are normally shorter whilst Bull markets are longer in duration.
It is how you forsee these markets moving, and how much time you have to invest (as well as money) as to whether you want to watch prices monthly, weekly, daily, hourly, or even by the minute.
So what should I do in a Bull Market?
A Bull Market can be relatively fast paced with buying and selling. Traders tend to like Bull markets.
A lot of investors take advantage of the rising prices by buying crypto early in the trend. They then sell the crypto at a higher price when they have reached their peak.
The skill is in identifying when a crypto stock is going to rise, when it is close to it's peak. The timescales you are looking at within the market play a ket as well. If you are playing the market hourly, then you may be looking to sell when it reaches a specific high point, and buy when it reaches a low point. This may only be a 1-2% variance on the price over a single day. However if you play the longer game and play the market on a daily basis you may be looking at variances of 2-5%. A very long game (HODL) will normally benefit over this period - and Bull Markets can last for 7 to 10 years.
And what should I do in Bear Market?
A Bear Market is about survival, but it can also be an opportunity to buy more crypto at cheaper prices.
One way investors do this is by using a strategy called dollar-cost averaging. This is where you invest a small, fixed amount in the market every month regardless of how the prices go down. How much is "small" is up to you. A Bear market usually last between 1 and 2 years. For me (a small time, fun investor) this would be about £5 per month (£120 over 2 years). For others it might be £10, £100, or £1000 per month. This is a long term strategy so only stake what you can afford.
The goal is that when the prices recover, you will have bought at a cheaper price and can sell them for a profit.
So now you know what the two terms mean. It is for you to decide whether you think the market is a Bull or Bear market over a short period of time. Over longer periods of time the financial world will pretty much tell you what it is (for example the Wall Street Crash of 1929, Post Great Depression Bull Run 1932 (57 months), Black Monday Crash 1987, 90's Bull Run (113 months), "Dot-Com" Bubble Crash of 2000).
How you build this into your portfolio and risk factors is also up to you. Buy low and sell high? But when is just a small dip or small peak a real bull or bear run? Have you sold too early, or kept hold too late? These are the questions that plague all investors!
