What is a Bear Market?
A bear market represents a period of declining prices in financial markets, typically defined as a drop of 20% or more from recent highs. In cryptocurrency markets, these drops can be more severe, with price declines often exceeding 50% from previous all-time highs.
Key Characteristics
Market Indicators
- Sustained price decreases
- Lower highs and lower lows
- Reduced trading volume
- Negative market sentiment
- Decreased market participation
Psychology Factors
- Loss of investor confidence
- Fear and uncertainty
- Pessimistic market outlook
- Reduced risk appetite
- Short-biased positioning
Trading Considerations
Strategy Adaptation
- Short selling opportunities
- Reduced position sizes
- Shorter holding periods
- Cash position management
- Hedging strategies
Risk Management
- Strict stop losses
- Limited leverage use
- Smaller trade sizes
- Portfolio protection
- Cost averaging strategies
Related Terms
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