Are you considering trading cryptocurrency in dedicated exchanges? You have probably already heard about the notions of bullish and bearish market trends. Though the origin of such names is debated, the definition of the two terms is simple. That is what we are going to explain just now.
Definition of bullish and bearish market trends
A bull market is a market trend where prices are going up, in other words, this means investors are buying. On the other hand, a bullish market happens when prices are going down, meaning investors are selling. These concepts in themselves are simple, even simplistic if you base your trading decisions exclusively on them.
Other ways to read trends
Most traders will use other tools to make out a trend in crypto markets. The moving average is a common tool used by crypto traders, it allows you to determine if a market is bullish or bearish on a specific period of time.
For example, with a moving average of 250 days, you will be able to make out the general trend of the market on a 250-day period. This is more precise than just looking at a general trend on an indefinite period of time which will give you little clue as to where the market will be going.
Origin of the expression bullish and bearish markets
A simple explanation is related to the general behavior of the two animals. Indeed, bulls are more famous for being fierce animal who will charge if threatened while bears are more timid and known for hibernating in the winter. This way, a bullish market trend is more like the attitude of a bull and the same goes for a bearish market and the bear.
Other origin stories involve the old proverb‘sellingthe bear’s skin before one has caught the bear’. In the eighteenth century, the expression to‘sell/buythe bearskin’ was used when a speculator sold stock. Learn more here.
Now you know what bearish and bullish market trends are. But you should remember that when trading you should always try to use several tools. This way you can cross information and make an informed decision that will hopefully be profitable.