Understanding Bull Market Term in Cryptocurrencies
Ever heard of the terms bear and bull market in the stock market? The same is true in the cryptocurrency market. Bear market and bull market itself are terms that indicate market conditions at that time for a certain period of time. A bull market characterizes market conditions with positive growth and bears vice versa.
Also read this article: Bear Market? This is the explanation and how to deal with it.
What is a bull market?
A bull market occurs when the price of an asset increases by as much as 40% within one to two days. This is because the market cap or crypto market coverage is not as wide as the traditional stock market, so it is more volatile or unstable. However, it is not impossible that the bulls can last for a matter of weeks and even the next few years.
The bull market begins with an increase in the purchasing power of high assets from investors. The Bullish market will exist as long as the market supply continues to be filled by the crypto market demand. Of course, market conditions may not occur continuously, from a bull market then bears will occur.
Bull Market Characteristics
There are several characteristics or characteristics that indicate the market is experiencing a bull market, you know. The following are the characteristics of a market that is experiencing a bullish market.
An increasing number of investors
A bull market is very favored by investors because it shows positive conditions in which asset prices can increase in the long term. When asset prices continue to increase, investors believe in the assumption that prices will continue to soar in the future. From there, they decide to buy more assets to earn higher profits in the future. Asset prices will continue to increase due to the large demand for crypto purchases from investors.
Economic growth supported by healthy competition
When investors believe in a company, they usually decide to buy shares or assets in that company. Funding from investors will greatly help the company’s costs, both in terms of increasing sales growth and company operations. To achieve this goal, it would require a lot of competent workforces. Some companies even dare to recruit employees in large numbers to provide high wages for their workers.
The high rate of employment
The Bullish Market shows positive economic conditions due to the healthy increase in crypto asset prices. Positive market conditions must be accompanied by strong economic conditions and high employment rates.
The risk of inflation
Although the bull market is the most preferred market condition for investors, it does not mean that there is no risk in a market that is growing rapidly. The high demand for crypto assets from investors makes asset prices increase due to the large demand for crypto purchases from investors. It is undeniable that this will cause inflation, although this is still an argumentative statement and there is no theory that states this with economic certainty.
Tips for Dealing with Bull Market
When the market price increases, investors may think that the price will continue to rise so they decide to continue buying and delay selling in order to get even higher profits. This is risky because the market for a crypto asset may not move in real terms. Traders can easily manipulate the price of certain crypto assets to make the price of that asset go up or down drastically.
Let’s take a case, for example, you see that the price of Bitcoin (BTC) is going up and decide to buy it assuming it will continue to rise. Then, you decide to keep the BTC in your wallet even though the price is experiencing a constant increase. However, it is undeniable that there could be investors or private whales selling their BTC in large quantities at once. This of course has an impact on the price of BTC assets or commonly referred to as dump prices. When that happens, you as a BTC holder (a term for crypto investors) must wait for the BTC asset price to recover from the dumping price.
Well, here are tips for dealing with a bull market.
Say NO to FOMO (Fear of Missing Out)
In investing, the thing you need to avoid is FOMO. Never buy or sell a crypto asset just because a lot of people are transacting at the time. For example, when many people make a profit by selling an asset, then you follow their decision to sell the asset without doing your own research and analysis. This could be a wrong move because the crypto asset turns out to be experiencing a high price spike sometime in the future. As an investor, it is important to do research that impacts your assets. To understand and know the tips, you can read the article The Importance of Do Your Own Research (DYOR) for Beginners Before Plunging into the Cryptocurrency World.
Make transactions step by step
You can pay in installments for buy or sell transactions or just monitor market movements on an exchange by analyzing market price movements that occur in an asset. This is done so that you can find out the right low price to buy an asset or when the price chart is rising or shows a positive chart which is certainly right for selling your asset.
After knowing the bull market conditions in cryptocurrencies, what is the most appropriate step for you to take? If you are facing a bullish or bearish situation, keep trying to be calm and think rationally so you don’t take the wrong step. Continue to follow our articles so that you understand more about the world of cryptocurrencies. Don’t forget to visit the Litedex, Instagram, Twitter, YouTube and TikTok websites to keep getting updated information from us!
