Worried about what to do during Recession? A Lesson of Bulls and Bears market for crypto traders
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Bull and bear markets are just like the four seasons, they are natural phenomena. No one can avoid facing them in their entire investing life.
What you can do during the recession is learn. To learn what kind of trading strategy can be applied in different market situations: bull and bear markets?
They are entirely different. If you want to protect your portfolio, different investment decisions should be made. Our detailed guide covers the basics of the Bulls and Bears, tips for trading, and how people reacted in history.
What is a bull market?
What is a bear market?
The history of bull and bear markets of Bitcoins
The trading strategies in bull and bear markets
What is a bull market?
Three features of a bull market
A longer period of upward movement of the market
A thriving economy
Low unemployment rate
When a market is consistently rising, whether it is crypto, real estate or stock, it can be defined as a bull market.
It is mainly determined by the investors’ emotions. Especially in the crypto market, if investors are confident in the market, investors are more willing to hold assets like crypto, stocks or real estate, which will lead to a bull market.
As the rising market will attract more capital from other investors and lead to a positive cycle. But the bull market will not always last long.
What is a bear market?
Three features of a bear market
A longer period of downward movement of the market
A declining economy
Increasing unemployment rate
When a market is consistently declining, it can be defined as a bear market.
Due to the loss of confidence in the market, investors want to sell their assets and switch to more secure assets like cash. When the supply is greater than the demand, it will lead to a crash in the market.
When there is a bear market, it will lead to the escape of capital as people’s investment incentives are affected. Even if the bear market will not last long, it is difficult to estimate when the recovery will be. It is affected by the government's economic policy, investors’ emotions and confidence and the news or environment.
The history of the bull and bear markets of Bitcoins
Famous bull market period of Bitcoins
From September 2010 to June 2011, Bitcoin rose from $0.06 to $36, then immediately dropped to $2.5 and never went below $2 again.
From January 2016 to December 2017, Bitcoin started to rise slowly from $400 to $20,000, a 50 times increase.
Due to the pandemic of 2020, central banks around the globe have issued additional fiat currencies and Bitcoin has reached its all-time high of more than 60,000 USD
The highlighted signifies the bull market of Bitcoin.
Famous bear market period of Bitcoins
From January to July 2012, Bitcoin dropped from $7.08 to $4.22. Due to the attack from hackers, people were worried about the security of the Bitcoin network.
From November 2013 to January 2015, it was called the crypto winter. Bitcoin’s all-time high was around $1,100 and the all-time low was $197.24. At that period, Silk Road, a famous online black market accepting Bitcoin to settle the payment was shutted down by the US government.
The largest cryptocurrency plunged as low as $30,527 in May 2022. That’s down 50% from its November all-time high of $69,000.
The highlighted signifies the bear market of Bitcoin .
The crypto trading strategies in bull and bear markets
Prices have been consistently rising during the bull market, while consistently declining during the bear market. Different trading strategies are required in different markets.
Crypto trading strategies in bull markets
In the bull market, going long and buying in are reasonable strategies. Buy crypto at an early time and sell it before reaching a peak.
As no one knows when the bull market will end, some experienced traders go short at the peak as they foresee there will be a bear market. This trading strategy may not fit for junior investors as it involves a high risk.
During the bull market, FOMO (fear of missing out)is common. It is an irrationa l trading action as people are afraid of missing a chance to profit from the bull market. The value of some crypto assets may be overrated.
Crypto trading strategies in bear markets
If you are not confident in the bear market, you should probably hold cash or stable coins to wait for the next bull market. Bitget Savings is an easy and secure way for users to grow their assets on Bitget.
On Bitget Flexible Saving, you can start earning a stable interest by saving your money in stablecoins like USDT. From now onwards, users can deposit funds into any one of our Savings products and start earning interest every day.
We are offering industry-leading returns, like DOT with 5.2% APR. You don’t have to lock up your savings for a long period of time. You can wWithdraw your assets at any time!
If you have gone short before the bull market, you can still make a profit during the bull market.
FUD (Fear, Uncertainty, and Doubt) is also common in the cryptocurrency market. The price is easily affected by some sudden news, like the relationship between doggie coins and Elon Musk. You may make rash decisions like leaving the market.
Through financial planning and risk management plans, it may help you avoid one of the biggest traps investors fall into: making investment decisions based on emotion.
If you are a long-term investor in crypto, believing in the potential of it, that may be the infrastructure serving billions of people in the future, HODL (Buy and Hold) is probably a reasonable strategy.
The dollar-cost averaging (DCA) strategy is invented to deal with uncertainties in the market: By increasing their position bit by bit, investors are less susceptible to negative emotions and as a result less likely to make irrational decisions.
It is suitable for investors who are not good at short-term trading but they focus on the investment potential of the crypto asset. You try to find undervalued crypto assets during the bull market and hold on to them for a long time.
If you’re a crypto newbie, you may not have time to watch the markets and do research on thousands of crypto. Copy trading may be a good fit for you.
You can leverage other traders’ resources like insight, trading experience, research and risk management strategies. It allows investors to copy or follow other investors (commonly known as professional traders/ experts) to have the same positions as the experts they are copying.
For investors, copy trading is easy to operate and transactions can be carried out automatically and instantly. On Bitget’s copy trading, you can automatically copy 12+ professional traders’ strategies, and instantly follow their action on the market. No matter if it is a bull or bear market, expert traders may have their own trading strategy including risk management.
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Disclaimer: This article should not be taken as the basis for making investment decisions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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