It is about time that the concept “bear market” was explained because most novices in the crypto market are always quick to say that the bear market has begun whenever a dip occurs in the crypto space. Even at the slightest 5% dip, they begin to panic and sell the coins in their portfolio because they believe that the end has finally come and Bitcoin will zero.
A bear market is a sustained 20% drop in prices; this can be applied to an entire market, like the crypto market, for example, or a single asset like Bitcoin. At the moment, most cryptocurrencies have dropped by over forty percent; some have even fallen further than seventy percent due to how speculative they are.
A bear market is an extreme market even in cryptocurrency, but we cannot specifically say that cryptocurrencies follow the same kind of rules that the stock market. Bitcoin is still under the 200-day moving average, and there is a lot of fear in the market. We are currently in a bearish trend in the market.
Despite being in a bearish trend, that does not mean that in this trend, we will be in the situation whereby we will see coins like Bitcoin and Ethereum going down by eighty to ninety percent from their all-time highs.
Just because we have had something in the past does not mean that we will have it in the future. Times have changed; things are not the way they used to be; the more we see the cryptocurrency markets being adopted, the more investors coming in, the nature of bear markets will also not be like the way they used to be.
Concerning the idea that we are currently in a bear market, we can have a bearish trend in a wider bull market. In 2018/2019, we had a devastating bear market, and during this period, in 2019, there was a bear market rally. It was somehow like a bullish period where everything was going crazy and all, but we never broke past the previous all-time highs. The bear market rally was a bullish period that lasted for a few months during a wider bear market.
The thing about this 2021 market is that we are in a bull market with a massive bearish correction in a wider bull market.
There are several reasons why we have not even gotten to a peak bear market situation; there is so much going on in the crypto market for us even to say that we are in a bear market or even at the peak of our peak a bear market situation. Polkadot is releasing Parachains, Ethereum 2.0 is coming out, Cardano smart contracts will be launched soon, and Bitcoin ETFs have not been approved yet.
There are several signs that we are entering a bear market, but those signs do not show that we are entering the kind of peak bear market people are worried we may be in.
