Bear market meaning refers to a negative trend in the prices of a market. It is widely used not only in the cryptocurrency space but also in the traditional markets, such as stocks, bonds, real estate, and commodities markets.
Typically, a bear market refers to a strong market downtrend that presents significant falling prices over a relatively short period of time. When compared to traditional markets, cryptocurrency markets are smaller and thus more volatile. Therefore, it is not uncommon to see stronger and prolonged crypto bear markets, where prices can drop to as much as 85%.
A bear market happens when there is a 20% price drop within a 60-day period. This downturn is typically the result of investor pessimism related to a loss of confidence in the overall performance of the market prices and indexes. In response to pessimistic market sentiment, investors start selling their holdings, further resulting in a drop in price and often leading to capitulation periods.
Most signs of an imminent bear market are not obvious, and traders and analysts would require other indicators to help recognize other, less obvious, bearish signals and trends. For instance, they can be moving averages (MAs), the Moving Average Convergence Divergence (MACD), the Relative Strength Index (RSI), the On-Balance Volume (OBV), and other technical analysis indicators.
In conclusion, bear market meaning refers to a negative trend in the prices of a market. Such trends may not be easy to spot, so traders would need to make use of financial tools to predict its onset.
