When it comes to markets, whether traditional or cryptocurrencies, the terms bullish and bearish often make headlines and conversations, although this usage tends to depend on financial knowledge and experience. What do these two terms mean?
The terms bullish and bearish refer to the market sentiment as perceived collectively or expressed by an individual. When someone is bullish, it means that they expect the value of the asset or asset class to rise. Conversely, bearish refers to negative price expectations. Someone is sometimes called bullish, or bullish if the market group or faction is bullish. As a result, the Bears expect assets to fall.
Why are bulls and bears used as animals for this terminology? The answer may lie in the way the two animals attack their prey. The bulls attack upwards, driving their horns into the target. The Bears, on the other hand, start high and attack downward with their weight and arms.
However, according to Investopedia, this explanation of the roots of the terminology is only one possibility. The actual origin of these expressions is not clear. Verbs can also be derived from bearskin for a long time.
The Oxford Study Dictionary defines bullish as: confident and positive about the future or causing or associated with an increase in the price of a stock. Bearish means indicating or predicting a decline in stock prices.
Bullish and bearish desires depend on a number of factors. In general, traders don’t care if a market is either actively bullish or bearish, as long as they can trade in both directions (i.e. long and short). Traders often get in and out of their positions more frequently than investors and use shorter time periods for their play.
Instead of wanting to be bullish or bearish, or vice versa, traders can be more concerned with being correct in their bullish or bearish assessment and win on trades as long as they accurately determine which direction an asset is moving in based on the trading strategies used. However, the strategies, talents or tendencies of some traders may favor one market condition over another.
On the other hand, investors tend to buy positions and hold them longer to make money on rising prices, so logically they want bull markets. An investor can take a long-term short position or sell an asset if he has a bearish view of that asset, although (in almost all cases) he can get at most a 100% return if he takes a short position at an absolute top and takes the asset to zero. On the other hand, assets can increase in value almost indefinitely and offer potential returns of more than 100%.
Why would an investor or trader want the price of bitcoin (BTC) or any other alcoin to fall, even if they are optimistic about the crypto industry as a whole? One reason could be his position. If a trader is bearish on BTC – anticipating an impending price drop – he may enter into a short trade in BTC and therefore logically want the price to drop because he will benefit from a drop in the asset.
Traders may even be bearish in the short term and bullish in the long term or vice versa. For example, you can expect bitcoin to fall in value for a few days or weeks, but eventually rise again and start an upward trend for several months.
Investors or traders may also have a bearish short-term view and a bullish long-term view, in that they want prices to fall in the near future to buy certain assets at relatively lower prices. Conversely, a market participant may have a rising view in the short term and a falling view in the long term. They may think that prices will rise due to hype or other factors, and thus buy or go long in the short term, while ultimately expecting to sell their positions because they think the market is a bubble or something.
It is important to note that in the markets, the definition of short term and long term can be subjective.
A look at what could lead to a bullish or bearish change
A person’s bullish or bearish opinion is likely based on a variety of things such as charts, news, and general knowledge. A market participant may consider bitcoin or altcoin to be bearish for a period of time based on certain conditions or chart patterns.
You can also follow negative ads, such as. B. certain government regulatory actions, longer-term asset views. For a while, there may be bullish sentiment based on an upcoming event, such as the launch of the Chicago Mercantile Exchange bitcoin futures market in 2017.
One can also take a generally bearish or bullish view of the asset as a whole. Michael Saylor, CEO of MicroStrategy, sees bitcoin as a new way to store value. Peter Schiff, a proponent of gold, considers bitcoin a bubble.
So there are many factors that go into different parts of the bull market and the bear market. Time frames, perspectives, opinions and events can all influence a person’s attitude towards a particular asset or asset class. Ultimately, everyone has to decide for themselves what they think.
frequently asked questions
What does bearish mean in crypto?
It’s a market where prices are falling, which is driving sales. Demand is significantly lower than supply and as a result prices are falling. A downtrend is characterized by strong pessimism about the scenario of a market price decline, low trading activity and short strategies.
What is a crypto bull?
Is it better to buy up or down?
Bullish sentiment means you are optimistic that prices will rise, while bearish sentiment means the opposite: you think prices will fall. … However, it can be just as profitable to be bearish.
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