A BEAR AND A BULL MARKET
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Before someone starts trading, there are certain terms he might have heard but he didn't know what they meant. He would not have even cared because he was not in the field of trading cryptocurrency. The first thing we learn when we start trading cryptocurrency is that coins fall and they also rise. The falling and the rising of assets is what brings about the bear and bull market.
The two terms speak for themselves and as such even a beginner in the field of crypto should easily get them. A bear and a bull has different features hence they are used to describe 2 differently scenarios in the market. A bear is used to describe the falling of the price of an asset.
A bear is a mostly dull animal hence when we hear that the market is bearish we quickly relate those 2 terms and then we get what they are talking about. A bull is used to describe an up-trending market. A bull is known as an animal that is most active and rowdy hence when they say a bullish market we quickly relate those 2 terms.
A bearish and bullish market has a lot of significance in the crypto market. A bearish market is used differently by crypto traders. Whilst others make losses during a crypto market, others take the opportunity and then accumulate more coins and wait for the bullish market to come so that they can make profits. The bearish market to some is like a signal to tell them that it is time to make profits but you have to wait till the bulls come.
A bullish market is where crypto traders are excited and hence traders make a lot of profits during a bullish market. Let us consider this scenario.
Imagine a trader buying an asset when it was at a price of about 1 dollar and then after a couple of trends, the price shot to 2 dollars. We can say that dye bulls have taken over the bears hence a trader who bought the price at 1 dollar will be making profits because he bought the asset when it was low in price.
When this happens other traders in the market wouldn't like they miss out on the opportunity of making profits hence they rush and then buy the assets without waiting to understand what might be happening next in the market.
Whatever rises shall fall hence the asset moving from a price of 1 to 3 dollars is an avenue for the asset to be tested at resistance hence it is more likely to fall than rice and then that trader who rushed in buying the asset for the fear of missing out might end up making losses.
This is where we look at the term FOMO( Fear Of Missing Out) which we will be looking at next time.