In the stock markets, bulls and bears have been waging war against each other for years. But what does it all mean?
The terms “bear” and “bull” have been used for many years in the financial and trading markets, and are thought to originally stem from the way in which each animal attacks its opponents.
A bull, when on the attack, thrusts its horns up into the air, while a bear will swipe downward. These actions reflect the often erratic movements of the markets well – when a stock or currency is trending upward it is considered to be moving in a bullish pattern, and likewise when a stock or currency is trending downward, it is referred to as creating a bearish pattern.
Also referred to as a bull market, a bull run is an extended period of time during which market prices rise and overall sentiment is positive. The last major Bitcoin bull run was in 2017, when the price of Bitcoin climbed from below $1,000 to nearly $20,000.
When an investor is bullish, they are optimistic about the price or state of a cryptocurrency. Bull markets see many investors become bullish at the same time, driving prices up and bringing attention to the market from the mainstream media and the general public.
When market sentiment turns negative, traders get shaken out of the market and lose faith in their trading positions. Money flows out of stocks and shares and prices begin to fall and this is referred to as a bear market, with some of the longest and most damaging bear markets seeing investors and institutions lose millions. Cyprus holds the record for the worst bear market of all time, during a period which saw investors lose over 99% of their investment.
The good news? Bull markets tend to last far longer and generate moves of far greater magnitude than bear markets do. Over time, bear markets have also proven to present great buying opportunities for longer term investors, providing they have the patience to wait out their trades.
“No price is too low for a bear, or too high for a bull.” – Ancient traders proverb