Bull or bear market is an example of financial jargon that is frequently used in investment markets. It is used by investors and financial media to indicate whether the direction of the market is rising or falling.
In different investment ecosystems, investors frequently encounter the term “bull or bear market,” which is a concept that is dominated by investors above a certain level.
If there is an increase in the markets, this situation is called bull market conditions; if the opposite is the case, it is called a bear market period. These terms are used not only in stock markets but also in crypto exchanges where digital asset classes are used.
Expert financiers or financial communities who share on this subject on social media often use bull or bear market definitions. Due to the high volatility in crypto markets, “bull vs. bear market” conditions are frequently observed.
If the tracked cryptocurrency is in decline for a long period, this period is called a “crypto bear market” by investors, but investors who talk about constantly increasing opportunity cryptocurrencies state that they are in the crypto bull market period.
If as an investor you see indicators that you are in a crypto bull market period, high returns may be possible. However, you should not neglect the fact that the risk factor increases if you are in a crypto bear market period.
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Join us in this blog as we explore where the terms bull and bear terms come from, what causes the increase and decrease in the markets, what marks the end of them, key differences between bull and bear markets, and more in detail!
Where Did These “Bull” and “Bear” Terms Come From?
Where do the terms “bull vs. bear market” that investors often use come from? In fact, these terms are basically inspired by animal behavior. The term ”bull markets” is used when a bull animal swings its horns up in natural conditions when it attacks.
However, bear market is used for a falling stock or cryptocurrency when a bear animal swings its claws down in an attacking situation. These expressions, which were first used in the stock market, later became valid expressions for different investment models such as forex and crypto exchanges.
If the term bull market is used in a finance article that publishes a statement about Bitcoin today, we can understand that Bitcoin has been in an uptrend for a long time.
Inspired by the movements of animals in their attacking forms in nature, these expressions are used by investors and financiers in modern investment ecosystems today.
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What Is a Bull Market?
Bull market is a term that describes periods when the price of the investment instruments being followed is on the rise. Investors’ confidence increases in such markets. Economic indicators give positive signals about the market.
It is a market where the risk factor is lower. It is also seen in stock markets and cryptocurrency exchanges from time to time. If the bull market expression is experienced in cryptocurrency exchanges, this process is called a “crypto bull market.”
The term bull run refers to a more accelerated rise in a shorter period of time. In other words, if a market is experiencing a bull run period, the investment model being followed is in a period of great rise for a short time.
If it is remembered that cryptocurrencies have frequent price fluctuations, the crypto bull run situation is a frequently used expression.
In other words, the process of a cryptocurrency being followed from time to time and doubling its value overnight, which can often happen in such scenarios, is called a crypto bull run.
What Causes a Bull Market?
The formation of bull market conditions in any market depends on many factors. However, when these basic factors occur, bull market conditions can usually occur:
- Low interest rates,
- Financial growth,
- Decrease in inflation,
- Increase in the total value of companies,
- Increase in investor confidence,
- New money entering the market.
These factors are valid elements for almost every investment model and market for the emergence of a bull market. However, the rise of cryptocurrencies followed by crypto bull market conditions can sometimes be reflected in other altcoins.
Characteristics of a Crypto Bull Market
The basic characteristics of crypto bull market conditions can be listed as follows:
- The value of popular cryptocurrencies such as Bitcoin increases,
- Users reach high trading volume,
- Positive news about digital asset classes is made in the media,
- Investors getting involved in crypto exchanges due to the FOMO effect,
- Increased interest in new and innovative projects.
In such periods, crypto bull run processes can often occur in crypto exchanges. However, in crypto markets where rapid increases are frequent, rapid declines can also occur. Since it is a risky market in terms of volatility, bull and bear market conditions are frequently experienced.
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What Marks the End of a Bull Market?
This process does not last very long, as bull market conditions occur in investment models such as traditional stock markets and forex markets. It can be realized that this period has ended with the help of some factors.
The end of bull market conditions and the beginning of bear market conditions in a market can usually be understood thanks to the following indicators:
- Overdose in prices, which can create a kind of inflation,
- Decrease in investor sensitivity and interaction,
- Economic indicators that give negative signals,
- High interest rates published by central banks while struggling with unemployment and inflation.
If you are looking for clues about the approaching end of the bull market in crypto exchanges, sudden and sharp corrections are usually the harbingers of the crypto bear market period and are one of the signs of the end of the crypto bull market.
If the price uptrend is slowing down, it can be claimed that crypto bear market conditions will start after a while.
What Is a “Bull Run” in Crypto?
A crypto bull run is a sudden price increase in any of the cryptocurrencies on crypto exchanges. Rapid and short-term increases are a process frequently experienced by those who manage investment portfolios through cryptocurrencies.
Therefore, crypto bull runs are a frequent occurrence. If crypto bull run conditions occur on crypto exchanges today, this development will cause a great impact on social media. New investors determine their strategies accordingly. Many projects start receiving investment.
For example, in the past, when Bitcoin experienced a value increase of 2x-3x in a very short period of time, crypto bull market conditions were experienced, and this increased the investment of other altcoins.
What Is a Bear Market?
The term bear market is a financial concept inspired by the fact that bears hold their paws down while defending themselves in natural conditions.
It means that the market being followed has been in decline for a long time. Investors may experience a decrease in confidence during these periods.
In addition, investments decrease during this period when pessimism prevails. Bear market conditions can occur not only in markets such as stock exchanges or forex but also in digital investment models where digital asset classes such as cryptocurrencies are managed. We even know that this situation is more common in crypto exchanges. Such periods are called crypto bear markets.
What Causes a Crypto Bear Market?
There are many factors that cause “crypto bear market” conditions in a market. Although it varies depending on which market and investment model you are in, the following elements basically cause bear market conditions:
- Macroeconomic indicators giving negative signals. For example, statistics such as recession, interest rate hikes, and unemployment increases.
- Major selling pressures
- Sanctions imposed by control mechanisms on cryptocurrency exchanges and increased regulatory practices
- Hacking incidents
- Decreased investor confidence
- Decreased transparency
To give an example of such a situation in recent years, Terra, a popular cryptocurrency, experienced a major loss of value in a short time. This process is referred to as the crypto bear market by investors. And this decline indirectly affected other altcoin types, and the crisis continued for a while.
Whether you are an investor in the stock markets or the forex market, the atmosphere offered by bear market conditions is not much different from crypto bear market conditions.
In all these known investment models, if a market is going through a bear market period, the negative elements will apply to all of them.
However, investors should especially remember to wait for crypto bull run periods. If they are a little more patient and make transactions that are in line with their risk tolerance, it is possible for them to win in the long run.
Characteristics of Crypto Bear Markets
If there is a long-term downward trend in cryptocurrency exchanges, this period is unfortunately referred to as a bear market period. Unlike crypto bull market periods, the basic characteristics of crypto bear market conditions can be listed as follows:
- Prices continue to fall for a long time
- Investors care more about the risk-return balance.
- Interest in safe havens such as stablecoins increases
- Innovative initiatives or projects have difficulty finding investment.
- Negative news about blockchain technologies and cryptocurrencies increases in the media
- Many high-profile investors withdraw from the market.
For example, the returns obtained during the bull run period may be lost during this period. Therefore, such periods may also cause psychological damage to investors.
Bull vs. Bear Market: Key Differences
When comparing the two financial concepts that are often mentioned together, “bull vs bear market,“ it will be seen that there are some differences between these two market conditions. The most obvious ones can be listed as follows:
- There is a significant and continuous increase in the market during bull market periods, but the decline continues in other market conditions.
- Investors are more optimistic and have high confidence in bull market conditions.
- Investors have a more anxious and pessimistic approach during bear market periods.
- While the trading volume increases during bull market periods, there is a significant decrease in other periods.
- Good news is often seen in the media when a market is in a bull market period.
- “Crypto bull run” can be experienced in cryptocurrency exchanges during bull market periods.
Investors who experience these differences can make more accurate analyses about future market trends when they better understand market dynamics. These two different market conditions create different risks and opportunities for investors.
For this reason, it would be good to develop approaches that are far from emotional reactions and have a long-term perspective.
Which One Is Better: Bull or Bear Market?
At first glance, bull market conditions are more attractive for an investor, of course, between bull and bear markets. Bull market conditions are more ideal since novice investors usually expect their portfolios to gain value. However, bear markets may not always be bad.
In other words, falling prices can create opportunities for long-term investors. Buying a cryptocurrency or stock during periods when the price is low offers great potential for return in the long term.
If you are trading on cryptocurrency exchanges, of course, the best scenario would be to buy during bear market periods and wait for your portfolio to appreciate during crypto bull run periods. However, it is not always possible to optimize this risk-return balance 100% correctly.
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