Bulls vs. Bears
This guide aims to define the main difference between bull markets and bear markets (the overall direction and price trend of a market). Additionally, it will define the difference between the bullish and bearish traders and investors that participate in those markets.
Traditionally for a market to be considered either bullish or bearish, its price needs to trend consistently up or consistently down for months or years. If a market’s price bounces up and down in a price range it is considered sideways or rangebound.
Bull markets or bullish traders are those who are optimistic that prices will continue to rise, resulting in an upward trend in market price. It is speculated that bull markets are named after the fact that bulls draw their horns up when they attack.
Many Cryptocurrency investors use one key indicator to show that a bullish market trend has started, this is known as the Golden Cross. The Golden Cross occurs when the 50-day EMA (exponential moving average), crosses above the 200-day EMA, showing that the long-term trend is changing.
The chart below highlights when this occurred (the orange 50-day EMA line crossed above the blue 200-day EMA line), on October 12th 2020, since then the price of Bitcoin has skyrocketed from $11,500 to over $64,000:
Opposite to bull markets or traders, bearish markets and traders are pessimistic that prices will continue to fall, this results in a downward trend in price. Bear markets are possibly named after bears who claw down when they attack.
The opposite of the Golden Cross is known as the Death Cross, this indicator is what many Cryptocurrency traders and investors use to signal the start of a downtrend. The Death cross occurs when the 50-day EMA crosses below the 200-day EMA, showing that the long-term trend is starting to decline.
The chart below shows that when this happened on the 30th January 2018 (the orange 50-day EMA line crossed below the blue 200-day EMA line), the price declined from over $11,000 to a low of under $3,200:
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Please note, this article is not investment advice and is for information purposes only.